Goodbye to Single Internet Platform Dependency! "Innovative Pharmaceuticals + Intelligent Vehicles" Dual Engine Driving, Hong Kong Stock Tech ETF Invesco (513980) Captures Multi-track Alpha

In the race within the Hong Kong stock technology theme index track, the CSI Hong Kong Stock Connect Technology Index (931573.CSI) stands out by significantly overweighting the pharmaceutical and biotech sectors as well as new energy vehicles, forming a distinctive positioning different from mainstream broad-based indices like the Hang Seng Tech.

Besides covering traditional tech fields such as electronics and computing, the index shows a clear overweighting in emerging sectors like pharmaceuticals, biotech, and new energy vehicles compared to other Hong Kong tech indices. A broader industry distribution helps diversify sector-specific risks and better aligns with future technological diversification trends, benefiting from the high growth potential of emerging industries.

Data from Wind shows that as of March 12, 2026, the combined weight of pharmaceuticals, biotech, and automotive sectors in this index is nearly 35%, significantly higher than similar indices like Hang Seng Tech. This “dual-sector” structure—featuring innovative drugs and smart vehicles—not only effectively disperses concentration risk associated with single internet platforms but also allows investors to capture the dual era dividends of aging populations and energy revolutions, adding stronger defensive depth and performance resilience beyond pure tech growth attributes.

Figure: Industry Distribution Comparison of CSI Hong Kong Stock Connect Technology Index (%)

Source: Wind, as of 2026.03.13 (Industry classified by Shenwan Level 1)

High Pharmaceutical Allocation: Locking in Innovation Drug Valuation Recovery and Overseas Expansion Benefits

The index’s overweight in pharmaceuticals and biotech is not merely defensive but strategically positions itself at the critical transition point of domestic innovative drugs from “R&D investment phase” to “global commercialization phase.” The index includes leading companies like WuXi Biologics, BeiGene, and Innovent Biologics.

With the Fed’s rate cut expectations rising, highly reliant on overseas financing, the cash flow pressures on innovative drug companies are easing, and their R&D pipeline valuations are expected to undergo systematic reassessment.

More notably, Chinese innovative drugs are entering a breakout phase of going global: in 2025, the total BD transaction volume for Chinese innovative drugs exceeded $120 billion, with major multinational pharma companies like AstraZeneca and AbbVie placing substantial BD orders, fully validating China’s innovative drug pipeline’s global competitiveness.

Figure: Total BD Transaction Volume of Chinese Innovative Drugs

Source: Pharma Cube, Data range: 2017-2025

Compared to pure internet indices constrained by regulatory policies and peak traffic dividends, the “silver economy” attribute of the pharmaceutical sector offers cyclical growth certainty. Recent continuous increases in southbound funds on stocks like WuXi Biologics further strengthen liquidity support for this sector.

High Automotive Allocation: Seizing the Wave of New Energy Vehicles and Globalization

In the new energy vehicle segment, the CSI Hong Kong Stock Connect Technology Index also exhibits a significant overweighting, with constituents including leading automakers like Li Auto, Xpeng, and NIO, as well as core battery industry players like CATL and BYD.

Unlike traditional tech indices that only include internet platforms, this configuration allows the index to deeply benefit from the global trend of automotive electrification and intelligence. China’s NEV penetration rate has already surpassed 50%, moving from the “electric vehicle first half” to the “intelligent vehicle second half,” with commercialization of autonomous driving, smart cabins, and vehicle-road coordination opening new valuation space.

Figure: China’s NEV Sales and Penetration Rate 2020-2025

Source: China Association of Automobile Manufacturers

Meanwhile, Chinese automakers are accelerating their overseas expansion, with vehicle exports in 2025 increasing over 35% year-on-year, and brand recognition in Europe and Southeast Asia continuing to grow.

The high proportion of automotive stocks in the index allows capturing both the short-term sales elasticity driven by domestic policies like vehicle replacement subsidies and the long-term growth dividends from increasing global market share, creating a “domestic + international demand” dual-driven pattern.

Synergistic Effect of Dual Overweighting: Risk Diversification and Economic Cycle Hedging

The dual overweighting of pharmaceuticals and automotive sectors is not just a simple industry stacking but a strategic combination of low-correlation assets to optimize risk-return. When tech hardware faces shocks from tightening overseas liquidity, the pharma sector often benefits from domestic healthcare policies and rigid demand; when clinical data fluctuations disturb innovative drug stocks, the certainty of automotive intelligence trends provides performance buffers.

This “hard tech + big health” hybrid structure has demonstrated stronger resilience amid market volatility since 2025. As of January 31, 2026, among various Hong Kong tech-related indices, the CSI Hong Kong Stock Connect Technology Index has the highest increase since 2025 at 41.03%, outperforming the Hang Seng Tech’s 36.34% by 4.69%.

Valuation-wise, the PE (TTM) of the CSI Hong Kong Stock Connect Technology Index stands at 25.5x, near the 30% percentile over the past five years, and a P/B ratio of 3.59, at the 68% percentile, leaving ample risk buffers.

Figure: Risk-Return Metrics Comparison Since 2025

Source: Wind, as of 2026.01.31

Invesco Hong Kong Stock Connect Technology ETF (513980)—Assets Surpassed HKD 20 Billion with Clear Liquidity Advantage

As one of the first on-market ETFs closely tracking the CSI Hong Kong Stock Connect Technology Index, Invesco’s ETF benefits from precise positioning and efficient operation, establishing a notable competitive edge within the Hong Kong tech ETF landscape.

Thanks to Invesco Great Wall’s market-making network in ETFs, the Invesco Hong Kong Stock Connect Technology ETF (513980) enjoys ample secondary market liquidity, with assets exceeding HKD 20 billion and average daily trading volume above HKD 1 million, highlighting its liquidity advantage among peers.

Additionally, the fund is complemented by well-established off-market connect funds (Class A 016495, Class C 016496), catering to diversified needs such as systematic investment and conversions, making it suitable for retail investors’ convenience and institutional strategies.

Risk reminder: The brands mentioned are for illustrative purposes only and do not constitute specific company or stock recommendations. Markets carry risks; invest cautiously!