On the afternoon of March 27, A+H innovative drug stocks showed strong momentum, continuing their upward trend. The Huabao Hong Kong Stock Connect Innovative Drug ETF (520880), which invests 100% in innovative drug R&D companies, saw its gains surge towards 5% in the afternoon session, with trading volume exceeding 500 million yuan, far surpassing the previous day's total. The Huabao Pharmaceutical ETF (562050), which is heavily weighted in A-share innovative drug stocks, also rose over 4%.
Regarding individual stocks, more than 45 of the 50 constituent stocks of the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880) traded higher. Leading weighted stock CSPC PHARMA surged 13%, breaking through five moving averages consecutively. Stocks including Immunotech-B, Yundaoyiyao, Yingsigu Intelligent, and Keji Pharma-B all gained over 10%. Sino Biologic, which reported a turnaround to profitability for 2025, rose nearly 8% following its results.
As of now, 30 constituent stocks of the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880) have released their 2025 annual reports. Among them, 17 innovative drug R&D companies achieved profitability, 16 reported net profit growth of double-digits or more year-on-year, and 6 saw year-on-year growth rates exceeding 100%, with the highest increase surpassing elevenfold.
Institutions believe the window for left-side allocation in the innovative drug sector is clear, with a dense period of catalysts expected from March to April. Industry conferences like AACR and ASCO, combined with the release of annual and Q1 reports, are anticipated to drive a valuation repair for the sector. Platform-based biopharma companies and those with normalized BD revenue possess stronger odds of success and higher elasticity, indicating significant long-term investment value.
Data shows that as of March 21, 2026, the total value of outbound BD deals for Chinese innovative drugs has reached $57.1 billion, with upfront payments of $3.3 billion across 53 deals. The total deal value is equivalent to 41% of the entire year of 2025 and has already surpassed the full-year 2024 level.
In the secondary market, the current correction in A+H innovative drug stocks has lasted for two quarters, making the current position attractive for its investment value. To capitalize on the rebound opportunity in innovative drugs at low levels, focus on two key instruments: For pure exposure to innovative drugs, consider the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880). It offers 100% allocation to innovative drug R&D companies, with its top ten holdings accounting for over 70% of the portfolio, highlighting its leading characteristics. Its underlying assets are Hong Kong stocks, offering high elasticity and the advantage of T+0 trading. For investors seeking lower volatility, the Huabao Pharmaceutical ETF (562050) is an option. It features a unique allocation of "70% innovative drugs + 30% traditional Chinese medicine," a rare combination in the market. It combines the high growth potential of innovative drugs with the high dividends of traditional Chinese medicine, offering both offensive and defensive characteristics.
A MACD golden cross signal has formed, indicating positive momentum for these stocks.