Core Viewpoint - The Hong Kong innovative drug sector has experienced significant growth in the first half of 2025, driven by policy support, industry catalysts, and market sentiment, leading to outstanding performance of actively managed equity funds focused on this sector [1][2]. Group 1: Fund Performance - Several actively managed funds, including Huatai-PineBridge Hong Kong Advantage Selection A, achieved returns exceeding 60%, with Huatai-PineBridge leading at 85.64% as of June 27 [1][2]. - The top holdings of these funds saw substantial gains, with Rongchang Bio rising 278% and other companies like Innovent Biologics and Kelun-Biotech also exceeding 100% in growth [1]. - ETFs tracking the Hong Kong pharmaceutical sector also performed well, with the top ETF, Huatai-PineBridge National Index Hong Kong Innovative Drugs ETF, seeing a net inflow of over 6 billion yuan, increasing its size from 653 million yuan to over 7.8 billion yuan [2]. Group 2: Market Dynamics - The innovative drug sector is currently in a high valuation range, with some institutions suggesting that short-term speculative trading may lead to profit-taking and potential stock price adjustments [3]. - The market has seen a resonance between market liquidity and industry logic, with multinational corporations (MNCs) driving significant business development (BD) in innovative drug companies [2][3]. - Recent policy measures announced on June 30 aim to support the high-quality development of innovative drugs, enhancing R&D support and facilitating market access [4]. Group 3: Future Outlook - The new policy framework is expected to enhance the certainty of R&D in innovative drugs and accelerate commercialization cycles, providing further support for sector valuations [4]. - Investment opportunities are anticipated in product-oriented companies, particularly those focusing on global market expansion and innovative breakthroughs [4][5]. - The Chinese innovative drug industry is at a critical turning point, with ADC and bispecific antibody technologies expected to capture significant market share in global immunotherapy, although caution is advised regarding competition and the role of AI in drug development [5].