On September 19th, Hong Kong Stock Connect biotech stocks maintained positive momentum with fluctuations after an early morning rally and subsequent pullback. MIRXES-B stood out as the day's standout performer, skyrocketing up to 25% during the afternoon session. InnoCare and Zai Lab-B posted strong gains exceeding 5%, while heavyweight BeiGene advanced over 2%.

The Hong Kong Stock Connect Innovative Drug ETF (520880), which focuses 100% on biotech R&D companies, initially surged as much as 2.57% at market open and remained up over 1% at press time, with trading volume surpassing 300 million yuan.

According to data from Private Equity Ranking Network, as of September 12th, the average position of equity private funds across the market exceeded 78%, rising nearly 3 percentage points from September 5th to reach the highest level this year. Several multi-billion yuan private equity firms recently disclosed they are maintaining medium-to-high position levels while adding quality biotech targets on market weakness. Industry professionals believe that China's competitive advantages in key industries remain intact, the economic recovery trend continues, and structural opportunities in A-shares and Hong Kong stocks are expected to persist.

This view is supported by recent capital flows into the Hong Kong Stock Connect Innovative Drug ETF (520880). Data shows that as of September 19th, the ETF has attracted consecutive inflows for 14 trading days, totaling nearly 680 million yuan. CICC Global Strategy Chief Analyst recently suggested that September could present an opportune time for biotech sector positioning.

Fund manager Feng Chencheng of the Hong Kong Stock Connect Innovative Drug ETF (520880) believes investors should maintain close attention to the biotech sector rather than "exiting the market." Short-term market corrections may actually provide rare buying opportunities for genuinely high-quality biotech companies. Specifically, the biotech sector currently has three major supports:

1. A favorable macro environment is emerging. The Federal Reserve has resumed its rate-cutting cycle, potentially creating global pharmaceutical sector momentum with high elasticity. Medical and pharmaceutical sectors have never been absent from China's major bull markets.

2. The industrial trend for this round of biotech innovation is clear and definitive. Multiple innovative drugs are currently in advanced overseas licensing negotiations, with subsequent clinical progress and commercialization potentially generating continuous cash flows.

3. The market will gradually return to focus on "true leaders." Biotech investment has entered the alpha phase, where stock selection factors outweigh beta. The market will progressively favor genuine leaders with clinical value and demonstrable performance delivery.

**Hong Kong Stock Connect Innovative Drug ETF (520880): CXO-Free, Pure Biotech Play with High Hong Kong Stock Elasticity**

Recently, the Hang Seng Hong Kong Stock Connect Select Innovative Drug Index tracked by the Hong Kong Stock Connect Innovative Drug ETF (520880) underwent "purification" revisions that took effect, completely eliminating CXO companies and selectively including 14 biotech R&D companies. This upgrade transformed it into a pure biotech index that is "CXO-free and 100% focused on biotech R&D," precisely representing the core strength of domestic innovative pharmaceuticals.

Year-to-date, the Hong Kong Stock Connect Innovative Drug ETF (520880)'s underlying index has demonstrated higher elasticity and maximum offensive capability among similar indices. As of the "purification" revision effective date (September 5th), its cumulative gain reached 119.75%, leading biotech indices. Following the September 8th revision implementation, it will completely avoid CXO interference on index performance and is expected to demonstrate stronger offensive capabilities when biotech sector momentum emerges.

The Hong Kong Stock Connect Innovative Drug ETF (520880) is the market's first ETF tracking the Hang Seng Hong Kong Stock Connect Select Innovative Drug Index. As of September 12th, the fund's assets under management exceeded 1.7 billion yuan, with average daily trading volume of 521 million yuan since listing, making it the largest and most liquid ETF in its category. It supports intraday T+0 trading without QDII quota restrictions. Off-exchange investors may consider its feeder fund: 025221.

**Reminder**: Recent market volatility may be significant, and short-term price movements do not indicate future performance. Investors must make rational investment decisions based on their financial situation and risk tolerance, paying close attention to position sizing and risk management.

**Risk Disclosure**: The Hong Kong Stock Connect Innovative Drug ETF passively tracks the Hang Seng Hong Kong Stock Connect Select Innovative Drug Index, with a base date of December 31, 2020, and publication date of July 17, 2023. Since publication, the index's complete annual returns were: 2021: -22.72%; 2022: -16.48%; 2023: -19.76%; 2024: -14.16%. Index constituent adjustments follow index methodology rules, and historical backtested performance does not predict future index performance. Individual stocks mentioned are for illustrative purposes only and do not constitute investment advice, nor represent holdings or trading activities of any funds managed by the fund company. The fund manager assesses the Hong Kong Stock Connect Innovative Drug ETF as R4-Medium-High Risk, suitable for aggressive (C4) and above investors, while the pharmaceutical ETF is rated R3-Medium Risk, suitable for balanced (C3) and above investors. Any information in this content (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, any form of expression) is for reference only, and investors must take responsibility for any independent investment decisions. Furthermore, any views, analysis, and forecasts in this content do not constitute investment advice to readers and bear no responsibility for direct or indirect losses arising from content usage. Performance of other funds managed by the fund company does not guarantee fund performance, past performance does not represent future results, fund investment involves risks, and fund investment requires caution.

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