A new investment tool has arrived in the Hong Kong stock market's biopharmaceutical sector. On March 18, 2026, the Hang Seng Biotech ETF Huatai-PineBridge (513930) was officially listed, providing investors with a convenient instrument to gain exposure to high-quality Hong Kong-listed biopharmaceutical assets with a single transaction.

The Hang Seng Biotech Index, which this ETF tracks, is the only healthcare sector index in the Hong Kong market that has a corresponding index futures contract. It primarily reflects the overall performance of biotech companies listed in Hong Kong that are eligible for the Stock Connect program, including those listed under Chapter 18A of the exchange's rules. The index components are highly concentrated on two core areas: innovative drugs and CXO, which together account for approximately 90% of the index weight. It also includes companies in cutting-edge fields like AI-powered healthcare, aiming to precisely capture the growth potential of Hong Kong's biotech industry.

Thanks to its unique index methodology, the Hang Seng Biotech Index has demonstrated strong performance during the 2025 rally in Hong Kong's healthcare sector. As of March 13, 2026, the index had achieved a cumulative gain of 62.08%, significantly outperforming the Hang Seng Healthcare Index (54.78%), the Hong Kong Stock Connect Healthcare Index (19.82%), and the Hang Seng Hong Kong Stock Connect Innovative Drug Index (59.18%) over the same period.

A wave of out-licensing deals continues to validate the global value of China's innovative drugs. In 2025, the total value of China's innovative drug license-out agreements reached $135.7 billion, with upfront payments totaling $7 billion across 158 deals. All three figures set new records, and China's share of the global total reached 49%, surpassing the United States for the first time to rank first worldwide. Benefiting from Chapter 18A, the Hong Kong market has gathered a group of companies with both innovative capabilities and potential for global expansion. Coupled with the start of a global interest rate cutting cycle and continuous optimization of the Stock Connect mechanism, mainland capital is accelerating its inflow, which is expected to jointly drive a re-rating of the sector.

Policy developments also signal positive momentum. The 2026 Government Work Report explicitly identified biopharmaceuticals as a "new pillar industry" for the nation for the first time, placing it alongside integrated circuits and aerospace. The regulatory focus has shifted from "cost control" to "encouraging high-quality innovation." The national reimbursement drug list continues to favor innovative drugs, and commercial insurance catalogs are being gradually implemented. This multi-payer system, combining national and commercial insurance, is opening up long-term growth space for the industry.

Looking ahead, Huatai-PineBridge Fund points out that 2026 is a critical year for validating the global value of China's innovative drugs. The investment rationale is expected to deepen from simply "whether a business development deal exists" to "whether the out-licensed pipeline can produce positive clinical data." As a large number of domestic innovative drug pipelines enter Phase III clinical trials, subsequent data readouts are set to become one of the most significant catalysts for the sector. Given the high barriers to investing directly in innovative drug companies, retail investors may consider using related ETFs for allocation. The Hang Seng Biotech ETF Huatai-PineBridge (513930) bundles leading Hong Kong-listed innovative drug and CXO companies into a single product, helping to diversify single-stock risk and capture the sector's overall growth opportunity.

As one of China's first ETF managers, Huatai-PineBridge Fund has over 19 years of experience in index investing and was awarded the "Passive Investment Golden Bull Fund Company" by the China Securities Journal for the eighth time in December 2025. In the healthcare sector, Huatai-PineBridge has extensive experience and has built a "healthcare index toolbox" covering key industry segments, having successively launched several quality products including the Innovative Drug ETF Huatai-PineBridge (517120), the Healthcare ETF Huatai-PineBridge (516790), the Traditional Chinese Medicine ETF Huatai-PineBridge (561510), and the Hang Seng Innovative Drug ETF Huatai-PineBridge (520500).