Recent surveys indicate a notable increase in investor optimism towards the healthcare sector.

During this week (October 13 to 17), the A-share market experienced volatility, with trading volumes falling below the 2 trillion yuan mark on both Thursday and Friday.

In terms of indices, the Shanghai Composite Index saw a significant decline, with a cumulative fall of 1.47% over the week, closing at 3,839.76 points. The Shenzhen Component Index dropped by 4.99%, the ChiNext Index fell by 5.71%, and the STAR 50 Index experienced a substantial decline of 6.16%.

Among the Shenwan first-level industries, the banking and coal indices rose sharply by 4.89% and 4.17% respectively, while the food and beverage and transportation indices saw slight gains. The remaining industry indices recorded declines, with sectors such as machinery, telecommunications, automotive, media, and electronics falling by more than 5%.

Regarding capital flows, there was a net outflow of 230.19 billion yuan from the main funds this week, with all 31 Shenwan first-level industries experiencing net outflows. The electronic, power equipment, and non-ferrous metals sectors witnessed the largest net outflows, amounting to 50.17 billion yuan, 35.57 billion yuan, and 22.23 billion yuan, respectively. Additionally, industries like computing, machinery, automotive, and non-bank financial sectors also saw net outflows exceeding 10 billion yuan.

Poor Profitability in A-shares Only 18% of Respondents Report Profitability On October 18, data collected indicated that only 18% of respondents reported being profitable. Among these, 13% noted profits of less than 10%, while about 5% recorded gains exceeding 10%. In contrast, 48% experienced losses of less than 10%, and approximately 34% faced losses greater than 10%.

Looking at the survey participants, 55% have been investing for over a decade, while 17% each fall within the 5-10 years and 1-5 years categories. This suggests that the respondents have substantial experience in A-share trading.

This week, 30% of respondents indicated that they had increased their positions, 18% reduced theirs, and 6% opted to liquidate their holdings, while the remaining 47% maintained their positions. Overall change in position management remained consistent; the proportions of respondents fully invested and under 50% invested each fell by 1 percentage point to 6% and 13% respectively, while those fully invested and fully liquidated each rose by 1 percentage point to 43% and 6% respectively.

Looking forward to next week, over 1,300 respondents expect the A-shares to stabilize between 3,800 points and 4,000 points, accounting for 47% of the votes. The bullish and bearish sentiments are relatively balanced, with 26% anticipating a push towards 4,000 points and 23% fearing a drop below 3,800 points. Another 4% of respondents cannot make a judgment on the market movement next week.

In a question regarding the potential peak of the current bull market for the Shanghai Composite Index, over 1,200 respondents chose 4,000 points, representing 43%. Currently, the index remains in an upward trend, and most respondents remain optimistic about reaching the 4,000-point mark. Furthermore, 34% believe the index could reach 5,000 points, 5% are looking at 6,000 points, and 18% project figures exceeding 6,000 points.

Following the recent pullback in A-shares, the proportion of respondents viewing the market as high risk has declined to 23%, a significant drop of 17 percentage points from last week. Meanwhile, 53% consider the market to be of medium risk, and 17% see it as low risk, which is an increase of 8 percentage points from the previous week, seeing a return to a moderate range.

Rising Optimism in the Healthcare Sector Regarding next week’s potential sectors in the A-share market, the healthcare sector is currently the most favored, with the recent survey showing an increase of 4 percentage points to 11%. In contrast, the optimism for non-ferrous metals has decreased from 19% to 16%.

Recently, numerous Chinese innovative pharmaceuticals have entered into licensing agreements with renowned companies such as Roche and Kite Pharma. Key announcements will be made during the European Society for Medical Oncology (ESMO) conference from October 17 to 21 in Berlin, where outstanding clinical data for innovative domestic drugs will be disclosed, presenting potential investment opportunities.

Guotai Junan Securities highlighted that the main investment opportunities in the healthcare sector for 2025 continue to revolve around innovative drugs and the reversal of left-side sector challenges. Investors are encouraged to focus on dual/multi-target drugs addressing unmet clinical needs and to monitor investment opportunities in areas such as antibody-drug conjugates (ADCs), dual/multi-target antibodies, and small nucleic acids, as both domestic and international financing data show marginal improvement, with an upward trend in CXO industry orders expected to enhance valuations and performance.