On the afternoon of November 7, the Hong Kong Stock Connect innovative drug sector followed the broader market downward, with Zai Lab (09688) plummeting nearly 10%, 3SBio dropping close to 6%, and Innovent Biologics falling over 4%. Meanwhile, top-performing BeiGene saw its gains narrow to less than 1%.

In the ETF space, the Hong Kong Stock Connect Innovative Drug ETF (520880), which is fully invested in innovative drug stocks, saw its decline widen to 2% in the afternoon session, breaching the 10-day moving average. However, bargain-hunting activity surged, driving a sharp rise in intraday premiums. Over the past four trading days, over 100 million yuan in capital has flowed into 520880.

On the news front, Zai Lab reported its Q3 2025 earnings on November 6. The company posted Q3 product revenue of $115.4 million, up 13% year-over-year, while its net loss narrowed to $36 million compared to the same period last year.

Meanwhile, BeiGene, often referred to as the "flagship of innovative drugs," delivered stellar results. Its Q3 revenue surpassed 10 billion yuan for the first time, reaching 10.077 billion yuan, a 41.1% year-over-year increase. For the first three quarters, revenue totaled 27.595 billion yuan, up 44.2% year-over-year and already exceeding full-year 2024 figures. Net profit attributable to shareholders reached 1.139 billion yuan.

Analysts suggest that the pharmaceutical sector is benefiting from multiple catalysts, including improving earnings and supportive policies, coupled with loose global liquidity conditions. The fourth quarter may present a valuation recovery window, presenting opportunities in innovative drug stocks after recent adjustments.

[Innovative Drug "New Force" – Hong Kong Stock Connect Innovative Drug ETF (520880): Pure Innovative Drug Exposure, High Concentration of Leaders, and Hong Kong Market Volatility] The Hong Kong Stock Connect Innovative Drug ETF (520880) and its feeder fund (025221) passively track the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index, which offers three key advantages: 1. Pure and comprehensive exposure – no CXO stocks, only pure innovative drug plays with full coverage of R&D-focused companies. 2. High concentration of industry leaders – the top 10 constituents account for over 71% of the index, representing core innovative drug players. 3. Better risk control – the index imposes mandatory weight reductions on less liquid components to effectively manage tail risks.

As of October-end, the top 10 constituents of the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index accounted for 71.51% of the index weight.

520880 is the first ETF in the market tracking this index. As of November 3, the fund's AUM exceeded 2 billion yuan for the first time, with average daily turnover of 474 million yuan since listing – making it the largest and most liquid ETF tracking this index.

Risk Disclosure: The Hong Kong Stock Connect Innovative Drug ETF passively tracks the Hang Seng Hong Kong Stock Connect Innovative Drug Selection Index (base date: December 31, 2020; launch date: July 17, 2023). The index's full-year performance since launch: 2021 (-22.72%), 2022 (-16.48%), 2023 (-19.76%), 2024 (-14.16%). Index constituents are adjusted per the index methodology, and past performance does not indicate future results. Constituent information is for reference only and does not constitute investment advice or reflect fund holdings. The fund manager rates 520880 as R4 (medium-high risk), suitable for aggressive (C4) or higher risk tolerance investors. All information herein is for reference only, and investors must bear responsibility for their investment decisions. No content constitutes investment advice, and the fund manager assumes no liability for any direct or indirect losses. Past performance of other funds managed by the same manager does not guarantee future results. Fund investments carry risks and require caution.