It's the right time to "tug-of-war" rebalancing at 3800 points! Is the medical devices sector about to "relay" the rally?

This week, China’s A-shares (A-share market) at around the 3,800-point mark started playing “sit-ups”—the speed of sector rotation has clearly increased. One very obvious example is that semiconductor equipment surged one after another, directly pushing down the previously hot “CPO.” Many sectors that are still at low levels have already seen changes in their fundamentals, making it a good opportunity to rebalance and optimize holdings—for example, medical devices, where capital has already begun to “act.”

The 11th batch of centralized procurement has just been officially announced to kick off. The rules have been comprehensively optimized, the “anti-involution” signal is clear, and fundamentals in the medical device sector are accelerating toward repair—making it very promising that the rally will continue to strengthen. Currently, the medical device sector ETF (159898) has been “pulling in money” for 3 consecutive days, totaling 27 million. In the past 20 days, it has surged to over 100 million, and it’s slightly up 0.34% during today’s intraday trading.

With this momentum, there’s something to it.

Many friends may wonder why capital chooses to bottom-fish and buy medical devices. Put simply, under the triple resonance of a policy floor + earnings floor + overseas expansion dividend, the upward channel for medical devices is opening, and this is a great time to lay in positions.

1、 Policy boost: from “price-involution” to “competing on innovation”

First, the biggest news in the pharma and medical field these days is none other than the new phrasing in the 11th batch of national centralized procurement documents—“stabilize clinical use, ensure quality, prevent bid-rigging, and counter involution.” This time, the procurement bidding opens on October 21. It clearly optimizes the control of price differentials, preventing “bad money driving out good,” and will inevitably provide a major catalyst for the sector.

Let’s give an example:

Before a certain cardiac stent centralized procurement, the price was 13k. After centralized procurement, it dropped to 700. Although patients benefit, enterprise profits have been crushed, leaving insufficient innovation drive. Now, the policy has shifted to “protect quality + encourage innovation,” meaning medical device companies can free up profit space to do R&D. High-end imaging equipment, surgical robots, and AI-assisted diagnosis—these “hard technologies”—will directly benefit.

2、 Earnings recovery: from the “darkest moment” to an “upturn turning point”

Wind data shows that in 2025, the forecast attributable net profit of the CSI Medical Devices Index is 13k yuan, and the year-on-year growth rate jumps directly to +23.71%. You have to know that in 2023, industry profits were still negative growth, and now it’s clearly passed the “darkest moment.”

More importantly, in the second half of the year and into next year, the policy will continue to provide “bottom support.” Centralized procurement will no longer be solely about the lowest price; the pace of innovative drugs and medical devices entering medical insurance will accelerate; and subsidy support for interest on loans for equipment upgrades will be provided. In simple terms, medical device companies now have both money to earn and directions to compete on. A rebound in earnings is very likely.

3、 Overseas expansion: from “Made in China” to “global brands”

If policy and earnings are the medical device sector’s “internal strength,” then overseas expansion is the sector’s “external booster.” Now, innovation in China’s medical devices is no longer “copycatting.” For example, United Imaging’s MRI systems are sold to the United States; Mindray’s patient monitors occupy 70% of the European market; and Nanwei Medical’s endoscopy consumables are becoming standard in German hospitals… In 2025, the overseas business growth rates of multiple device companies have already exceeded those in China, and even the overseas business share has surpassed it!

Overseas business growth rates of leading companies across medical device segments are higher than domestic in 2025H1

Source: company announcements, Wind, Guojin Securities Research Institute

It can be said that Chinese medical device companies have very broad growth room globally, and valuations are also gradually converging toward those of innovative medical device companies in the U.S.—the upside is very large.

The medical device sector ETF (159898), which has been continuously attracting inflows, is a high-quality option for allocating to medical devices. Because the underlying index’s layout of medical device sub-segment leaders in the Growth Enterprise Market and STAR Market is quite comprehensive, with the combined share of the two boards exceeding 80%. It’s well-suited to hold while the index is currently experiencing narrow-range volatility, laying in positions for the next leg of the primary upswing.

Author: ETF Jinchanzi

（责任编辑：刘静 HZ010）

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