On Tuesday (August 26), the broader market experienced narrow fluctuations with reduced volume. The Shanghai Composite Index touched an intraday high of 3,888.6 points, setting a new 10-year high, before closing down 0.39%. The ChiNext Index fell 0.76%. Total market turnover was 2.71 trillion yuan, significantly lower than the previous day's 3.18 trillion yuan.

A-share medical and pharmaceutical sectors pulled back after several consecutive days of gains. China's largest Medical ETF (512170) fell 1.27% intraday, while the market's only Pharmaceutical ETF (562050) that tracks pharmaceutical indices closed down 0.88%, both ending their four-day winning streaks.

**CXO Stocks Lead Decline! Medical ETF (512170) Maintains High Premium During Pullback**

Looking specifically at medical sector performance, CXO leading stocks declined across the board. WuXi AppTec fell 3.18%, Asymchem Laboratories dropped 6.59%, while Tigermed and Pharmaron both fell over 4%. Recent hot stock Meihao Medical declined 8%.

In terms of ETFs, China's largest Medical ETF (512170) traded underwater throughout the day, but maintained continuous intraday premiums with premium rates rising significantly toward market close, reflecting strong buying interest. Trading volume reached 802 million yuan.

From a sector opportunity perspective, medical stocks have continued to recover this year, but still have significant upside potential compared to relatively stronger sectors. Taking China's largest Medical ETF (512170) as an example, today's closing price of 0.388 yuan has yet to break through last year's September 24 rally high of 0.396 yuan.

From a valuation perspective, the CSI Healthcare Index underlying the Medical ETF (512170) currently trades at 25x PE, still below the range of over 62% of the time over the past 10 years, highlighting relatively attractive allocation value.

Under A-share bull market trends, reasonably valued low-positioned sectors may welcome catch-up opportunities and deserve close attention.

**Innovative Drug Leaders Diverge, Pharmaceutical ETF (562050) Hits New Intraday High**

In the pharmaceutical sector, innovative drug leaders showed divergence. Hengrui Medicine and BeiGene fell over 1%, while Baiyu Tianheng rose over 3% against the trend, and NHU gained 2.25%. Traditional Chinese medicine stocks also showed mixed performance, with Luye Pharma rising 1.73% and Pien Tze Huang falling 1.65%.

The market's only Pharmaceutical ETF (562050) tracking pharmaceutical indices initially surged to new all-time highs before quickly retreating and remaining underwater with significant premium toward market close, suggesting concentrated buying interest.

Pharmaceutical ETF (562050) is one of the market's rare focused pharmaceutical sector products, holding heavy positions in innovative drug leaders while maintaining approximately 30% allocation to traditional Chinese medicines.

Looking at pharmaceutical sector interim results, fundamental trends are improving. Among the 50 major pharmaceutical leaders covered by Pharmaceutical ETF (562050), 32 companies have disclosed first-half performance (including performance previews), with 29 achieving profitability and 15 showing positive net profit growth. Tonghua Jinbao, Darenpang, and Gan & Lee Pharmaceuticals all achieved doubled year-over-year net profit growth.

Guoyuan Securities points out that China's innovative drugs are entering a results materialization phase with substantial R&D progress catalysts, and being unaffected by trade wars, are expected to continue serving as the main investment theme for the pharmaceutical sector.

Regarding traditional Chinese medicine, Xiangcai Securities' latest report maintains an "overweight" rating, suggesting active attention to valuation recovery opportunities amid intensive interim report disclosures.

To capitalize on bull market catch-up opportunities, the medical sector still at low levels deserves key attention! For allocation tools, focus on China's largest Medical ETF (512170) and its feeder fund (012323), concentrating on "medical devices (52%) + medical services (40%)" with high correlation to AI healthcare, covering 6 leading CXO stocks.

To capture China's pharmaceutical value reappraisal opportunities, focus on the market's only Pharmaceutical ETF (562050) and its feeder fund (024986), concentrating on A-share's 50 leading pharmaceutical companies with heavy positions in innovative drugs (60%) while balancing high-barrier generic drugs and traditional Chinese medicines, completely excluding medical and CXO sectors.

According to Shanghai and Shenzhen exchange data, as of August 25, 2025, Medical ETF assets under management totaled 279.89 billion yuan, making it the largest medical and healthcare ETF in the market.

Risk Warning: Medical ETF and its feeder funds passively track the CSI Healthcare Index, with base date December 31, 2004, and publication date October 31, 2014. Pharmaceutical ETF and its feeder funds passively track the CSI Pharmaceutical Index, with base date December 30, 2011, and publication date July 15, 2013. The CSI Healthcare Index's annual performance from 2020 to 2024 was 79.67%, -14.71%, -25.1%, -24.25%, and -17.16% respectively. Index constituent adjustments follow index compilation rules, and historical backtesting performance does not predict future index performance. Individual stocks mentioned are for display purposes only and do not constitute investment advice or represent holdings and trading activities of any fund managed by the fund manager. The fund manager assesses Medical ETF and Pharmaceutical ETF as R3-Medium Risk, suitable for balanced (C3) and above investors, while Medical ETF feeder funds are assessed as R4-Medium-High Risk, suitable for aggressive (C4) and above investors. Suitability matching opinions are subject to sales institutions. Any information appearing in this article serves as reference only, and investors must take responsibility for any independent investment decisions. Furthermore, any views, analyses, and predictions in this article do not constitute investment advice to readers and bear no responsibility for direct or indirect losses arising from use of this content. Fund investment carries risks, past performance does not represent future results, and performance of other funds managed by the fund manager does not guarantee fund performance. Fund investment requires caution.

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