After a 7% surge in a single day, the Hong Kong Stock Connect innovative drug ETF Huabao (520880) once again outperformed the market! Institutions suggest a golden window period.

On the morning of April 2nd, the Hong Kong stock market generally retreated, with the Hang Seng Index falling nearly 1%. Innovative drugs performed against the trend again, with the 100% innovative drug development target—Hong Kong Stock Connect Innovation Drug ETF Huabao (520880)—rushing sharply above 1% at the start of trading. Yesterday, 520880 traded heavily and closed up 6.99%, marking the largest single-day increase since listing, with a daily turnover of 1.08B yuan, hitting a new high in nearly 8 months!

The constituent stocks showed mixed gains and losses, with Xuan Zhu Biological-B leading over 11%, Zai Lab up over 6%, heavyweight leaders CSPC Pharmaceutical and Hansoh Pharmaceutical up over 1%, while China Biological Products declined 1.5%.

Institutions suggest that current innovative drugs may be in a golden window of “performance realization, accelerated overseas expansion, and conference catalysis” combined with three cycles. In the secondary market, the sector has experienced a correction lasting over half a year since the end of Q3 last year, with valuation risks sufficiently released. It is recommended to pay close attention to current allocation opportunities.

In terms of performance, among the 48 constituent companies disclosed in the 2025 annual report of the Hong Kong Stock Connect Innovation Drug ETF Huabao (520880), 29 companies are expected to be profitable in 2025, 26 companies with net profit growth of over 10% year-on-year, 10 companies with growth rates exceeding 100%, with Huang Pharmaceutical surging over 11 times, and Cinda Biotech increasing over 9 times.

Regarding overseas expansion, according to the National Medical Products Administration, in the first three months of 2026, China’s innovative drug licensing transactions abroad exceeded $60 billion, nearly half of the total for 2025.

On conference catalysis, the American Association for Cancer Research (AACR) Annual Meeting will be held from April 17-22 in San Diego, USA. Reports indicate that over 100 Chinese pharmaceutical companies will participate, presenting nearly 400 research results covering multiple current hot targets, including nuclear medicine, DAC, cell therapy, mRNA, and other frontier technologies.

Pre-positioning for a rebound in Hong Kong pharmaceutical stocks, focus on two major T+0 tools:

Invest in innovative drugs by choosing Hong Kong Stock Connect Innovation Drug ETF Huabao (520880), 100% allocated to innovative drug R&D companies, with the top ten weights accounting for over 70%, highlighting leading attributes.

Invest in healthcare by choosing Hong Kong Stock Connect Healthcare ETF Huabao (159137), about 70% of the holdings are CXO + AI healthcare, balancing innovative drugs and medical devices (including brain-computer interfaces). The top ten holdings include rare internet healthcare leaders like JD Health and Alibaba Health.

Data sources: China Securities Index Co., Ltd., Shanghai, Shenzhen, and Hong Kong stock exchanges, etc. Note: ETF funds do not charge sales service fees. When investors subscribe or redeem fund shares, the subscription and redemption agents may charge a commission of up to 0.5%, including related fees from stock exchanges, registries, etc. For fund fee details, see each fund’s legal documents.

_Risk reminder: The index constituent stocks mentioned are for display only. Descriptions of individual stocks are not investment advice and do not represent holdings or trading trends of any fund managed by the manager. The risk level assessed for medical ETFs and drug ETFs (including the Hong Kong Stock Connect Innovation Drug ETF Huabao and Hong Kong Stock Connect Healthcare ETF Huabao) is R3—medium risk, suitable for balanced (C3) and above investors. The risk level for the Hong Kong Stock Connect Innovation Drug ETF Huabao and Hong Kong Stock Connect Healthcare ETF Huabao is R4—medium-high risk, suitable for aggressive (C4) and above investors. Any information in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, or any form of statement) is for reference only. Investors are responsible for their own investment decisions. Furthermore, any opinions, analysis, or forecasts in this article do not constitute investment advice and do not hold the manager or any of its funds responsible for any direct or indirect losses caused by using this content. The performance of other funds managed by the fund manager does not guarantee fund performance, past performance does not indicate future results, and investing in funds involves risks.

MACD golden cross signals have formed, and these stocks are showing good upward momentum!