Chinese A-share and Hong Kong-listed innovative drug stocks staged a strong rebound on June 23rd. The Huabao Pharmaceutical ETF (562050), heavily weighted in A-share innovative drug companies, and the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880), fully invested in Hong Kong-listed innovative drug stocks, both surged by approximately 3% during the session, recovering from record lows set just the day before.

The A-share pharmaceutical sector opened lower but moved higher, with the unique sector-tracking Huabao Pharmaceutical ETF (562050) rising nearly 3% intraday. Constituent stocks broadly advanced, with Sansheng Guojian soaring over 12% and Haisco Pharmaceutical Group climbing more than 8%. Notably, funds have been actively accumulating the Huabao Pharmaceutical ETF (562050) on recent dips.

Hong Kong Stock Connect-listed innovative drug stocks demonstrated significant elasticity. The Huabao Hong Kong Stock Connect Innovative Drug ETF (520880), which invests 100% in innovative drug R&D targets, surged nearly 4% intraday and was last up 2.36%. Shandong Xinhua Pharmaceutical Co. skyrocketed over 25% at one point, while Insilico Medicine and Yinuo Medicine-B gained more than 10%. Other leading heavyweights like Innovent Biologics, BeiGene, CSPC Pharmaceutical Group, and Akeso also traded in positive territory.

On the news front, China's National Medical Products Administration (NMPA) released its 2025 annual report on the progress of new drug registration clinical trials on June 22nd. The report indicated that the total number of clinical trials in China exceeded 5,000 for the first time, reaching a new historical high. The report covers two main categories: new drug clinical trials and bioequivalence trials. Among them, there were 2,997 new drug clinical trials, accounting for 57.5% of the total and representing an 18% year-on-year increase, while bioequivalence trials numbered 2,218, making up 42.5%.

Institutions point out that the long-term growth trend for the innovative drug industry remains intact. Recent adjustments in capital flows have built up potential for an upward rebound, and the sector's current valuation has become more attractive. The focus should be on the mid-year report window in July and August, where leading companies with better-than-expected clinical or business development progress are expected to show greater resilience. Analysts suggest focusing on targets aligned with the themes of innovation and internationalization.

For investors looking to accumulate core innovative drug assets at lower levels, two key investment tools are highlighted:

For pure exposure to innovative drugs, consider the Huabao Hong Kong Stock Connect Innovative Drug ETF (520880). It provides 100% allocation to companies engaged in innovative drug R&D, with its top ten holdings accounting for over 70% of the portfolio, highlighting its focus on industry leaders. Its underlying assets are Hong Kong-listed stocks, offering high elasticity and T+0 settlement.

For those seeking to reduce volatility, the unique Huabao Pharmaceutical ETF (562050) offers a distinctive "75% innovative drugs + 25% traditional Chinese medicine" allocation, a rare combination in the market. It provides exposure to the high growth potential of innovative drugs alongside the high dividend characteristics of traditional Chinese medicine stocks.

Data is sourced from the Shanghai, Shenzhen, and Hong Kong stock exchanges, China Securities Index Co., Ltd., and Hang Seng Indexes Company.

Note: ETF funds do not charge sales service fees. When investors subscribe for or redeem fund units, the subscription/redemption agent broker may charge a commission of up to 0.5%, which includes related fees charged by stock exchanges and registration institutions. Detailed fund fee structures are available in each fund's legal documents.

Risk Disclosure: The index constituents mentioned are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form and do not represent the holdings or trading动向 of any fund managed by the asset manager. The risk rating assessed by the fund manager for the Huabao Pharmaceutical ETF and its feeder fund is R3-Medium Risk, suitable for Balanced (C3) and above investors. The risk rating for the Huabao Hong Kong Stock Connect Innovative Drug ETF and its feeder fund is R4-Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article (including but not limited to stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are responsible for their own investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice of any kind to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee the performance of these funds. Past performance of a fund is not indicative of its future results. Fund investment carries risks.

A MACD golden cross signal has formed, indicating positive momentum for these stocks.