On July 1st, oversold healthcare assets launched a renewed offensive after just one day, with innovative drugs leading the rebound once again. The Huabao Pharmaceutical ETF (562050), heavily weighted in innovative drugs, surged 5.18% on high volume after pulling up from an early morning decline of over 2%, with an intraday swing of 7.83%. Just the day before, on June 29th, its on-market price had skyrocketed 8.15%, marking its largest single-day gain on record.

Within the Huabao Pharmaceutical ETF's (562050) 50 holdings, 48 stocks closed higher. Allist Pharmaceuticals led the gains, rising 15.21%, followed by InxMed Co., Ltd., Zhejiang Jingxin Pharmaceutical Co., Ltd., and 3SBio Inc., all gaining over 10%. Haisco Pharmaceutical Group Co., Ltd. hit the daily limit-up. Giants with market caps over 100 billion, Jiangsu Hengrui Pharmaceuticals Co., Ltd. and BeiGene, Ltd., closed up 3.34% and 2.82% respectively.

The medical sector staged a simultaneous reversal. China's largest medical ETF by size, the Huabao Medical ETF (512170), initially fell over 2% in the morning session before a sharp reversal turned it positive, briefly climbing as high as 3.27% and ultimately closing up 2.61% with an amplitude of 5.56%. It saw high-volume turnover of 932 million yuan. Medical device concepts led the gains, with Meihao Medical Group Co., Ltd. and Fujian Fure Medical Technology Co., Ltd. soaring nearly 14% and 13% respectively. Weigaoxiejing hit the limit-up, while heavyweight Mindray Bio-Medical Electronics Co., Ltd. surged 4.32%.

Key Drivers for the Surge

Zhang Fang, portfolio manager for the Huabao Pharmaceutical ETF (562050) and Huabao Medical ETF (512170), noted that the sudden surge in healthcare may be influenced by capital rotation from high to low valuations. After a prolonged and significant decline, the latest PE of the CSI Medical Index is around 28 times, sitting at approximately the 10th percentile of its valuation over the past decade. This places the overall valuation at a historically low level, offering high investment value for money, making it more likely to attract capital during market style rebalancing.

Positive news also provided a catalyst. Recently, the National Healthcare Security Administration officially released the preliminary review list for the 2026 National Reimbursement Drug List. The parallel operation of "basic medical insurance + commercial health insurance" and the newly introduced 8-year price protection mechanism for innovative drugs have strongly boosted sentiment across the entire pharmaceutical sector.

Fundamental Support

Fundamentally, since 2026, global and domestic healthcare investment and financing have continued to recover, showing significant year-on-year growth. This is expected to directly translate into CXO orders, supporting sustained high performance growth. The medical device sector benefits from the ongoing impact of equipment renewal policies, coupled with the dual logic of import substitution and overseas expansion.

Outlook for the Healthcare Sector

Regarding the subsequent trend for pharmaceuticals, Guojin Securities pointed out that as the global competitiveness of domestic innovative drug companies' clinical pipelines continues to improve, and healthcare policy and commercial insurance increasingly favor innovative drugs, several innovative drug companies are expected to continuously enter a period of harvesting performance results. Against the backdrop of strengthening global innovative drug asset sentiment, the current Chinese innovative drug sector faces a divergence of improving fundamentals and declining valuations, potentially offering highly elastic bottom-fishing investment value.

Instruments to Capture the Healthcare Rebound

To invest in innovative drugs, consider the exclusive on-market Huabao Pharmaceutical ETF (562050) and its off-market feeder fund (024986). Its unique allocation of "75% innovative drugs + 25% traditional Chinese medicine" is a scarce target in the market, combining the high growth of innovative drugs with the high dividends of TCM.

To invest in the broader medical sector, consider China's largest medical ETF by size, the Huabao Medical ETF (512170) and its off-market feeder fund (012323), with a latest size exceeding 25.6 billion yuan. It focuses on medical services (including CXO) + medical devices (including brain-computer interfaces), while also incorporating AI healthcare concepts.