Core Viewpoint - After a historic 10-day rally, the largest medical ETF in A-shares (512170) experienced a pullback, with the index dropping over 1% on July 31, 2023, and the medical sector also declining [1][4]. Market Performance - The medical ETF (512170) recorded a daily fluctuation of 2.67%, with a trading volume of 1.02 billion yuan, remaining at a relatively high level [1]. - In July, the medical ETF saw a cumulative increase of 11.48%, outperforming the Shanghai Composite Index (+3.74%) and the ChiNext Index (+8.14%) [2][4]. Sector Analysis - Major CXO stocks, including WuXi AppTec, experienced significant declines, with WuXi AppTec down 2.61% and a trading volume of 9.499 billion yuan, marking a near four-month high [4]. - Other medical device giants like Mindray Medical and Aier Eye Hospital also saw declines of over 2% [4]. Policy and Industry Outlook - There is a growing support from the government for innovative medical devices, as indicated by recent meetings held by the National Healthcare Security Administration [6]. - The policy shift aims to alleviate low-price competition in the industry and accelerate the development of high-end domestic medical devices [6]. - Public funds have increased their allocation to the medical sector, with the top ten A-share funds holding 11.51% in the medical sector, up 1.51% from the previous quarter [6]. Investment Opportunities - The medical ETF (512170) is highlighted as a potential investment opportunity, focusing on "medical devices + medical services" and is closely related to AI in healthcare [7]. - The first pharmaceutical ETF (562050) is also recommended, focusing on 50 leading pharmaceutical companies, emphasizing innovative drugs and high-barrier generic drugs [7].