On the afternoon of December 12, the Hong Kong Stock Connect (HKSC) innovative drug sector rebounded, with the high-beta HKSC Innovative Drug ETF (520880) turning positive and extending gains to over 1%, potentially ending a four-day losing streak. Notably, the ETF saw net inflows exceeding 130 million yuan this week as investors sought bargain opportunities.
Among constituent stocks, heavyweight leader AKESO led gains with a surge of over 6.8%, followed by Innovent Biologics rising more than 2% and BeiGene up over 1%. Everest Medicines, Tongyuantang Medicine-B, and Duality Biologics-B also advanced.
According to AKESO's official announcement, its globally first-in-class PD-1/CTLA-4 bispecific antibody, cadonilimab, combined with chemotherapy, has received U.S. FDA approval for a Phase III international multicenter clinical trial (COMPASSION-37/AK104-311). The study compares this regimen against chemotherapy with or without nivolumab as first-line treatment for HER2-negative, unresectable or metastatic gastric/gastroesophageal junction adenocarcinoma.
Ping An Securities highlighted that the innovative drug sector's growth momentum remains sustainable from three perspectives: business development (BD), commercialization, and policy support. Key recommendations include: 1) Companies with robust pipeline portfolios; 2) Firms with high-potential single-drug candidates likely to see price revaluation; 3) Leaders in cutting-edge technology platforms.
From an allocation standpoint, Hong Kong-listed innovative drug stocks have undergone a nearly three-month correction since early September, enhancing their valuation appeal. Investors looking to capitalize on this window may consider the largest HKSC Innovative Drug ETF (520880) and its feeder fund (025221). The underlying index, the Hang Seng HKSC Innovative Drug Selection Index, offers three key advantages: 1) **Pure-play exposure**: Excludes CXO firms, focusing solely on innovative drug R&D companies. 2) **Dominant leaders**: Top 10 constituents account for over 72% weight, representing core innovators. 3) **Risk control**: Enforces liquidity-based weighting adjustments to mitigate tail risks.
*Data source: SSE. "Largest HKSC Innovative Drug ETF": As of November 30, the ETF's AUM stood at 2.142 billion yuan with average daily turnover of 458 million yuan since listing, ranking it the largest and most liquid among two ETFs tracking the same index.*
**Risk Disclosure**: The ETF passively tracks the Hang Seng HKSC Innovative Drug Selection Index (base date: December 31, 2020; launch date: July 17, 2023). Annual returns since inception: 2021 (-22.72%), 2022 (-16.48%), 2023 (-19.76%), 2024 (-14.16%). Index composition may change per rules; past performance does not guarantee future results. Constituent stock mentions are illustrative and not investment advice or indicative of fund holdings. The ETF is rated R4 (moderately high risk), suitable for aggressive (C4) or higher-risk investors. Investment decisions carry inherent risks; historical fund performance does not predict future returns.
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