Core Viewpoint - The Hong Kong pharmaceutical sector has experienced a significant surge in stock prices, with many companies seeing increases of over 600%, yet most of these companies remain unprofitable, raising questions about whether this is a genuine market correction or speculative trading [1][3][11]. Group 1: Market Performance - In the period from July 1 to September 18, 2018, 201 out of 264 pharmaceutical companies listed in Hong Kong saw their stock prices rise, with 69 companies increasing by over 50% and 21 companies doubling their stock prices [3]. - Notable stock performances include New Wave Pharma (06108.HK) with a 928.71% increase, Beihai Kangcheng-B (01228.HK) at 802.70%, and Clover Biopharma-B (02197.HK) at 629.77% [4]. Group 2: Individual Company Analysis - Yaojie Ankang-B (02617.HK) saw its stock price soar from an IPO price of 13.15 HKD to a peak of 679.5 HKD, before experiencing a dramatic drop to 165.1 HKD, resulting in a market capitalization decline from nearly 270 billion HKD to 65.5 billion HKD [1][5]. - Beihai Kangcheng reported a revenue of 0.92 million HKD for 2024, a decrease of 17.27%, with a net loss of 478 million HKD [7]. - Clover Biopharma reported a revenue of 41.49 million HKD for 2024, a decrease of 2.13%, and a net loss of 976 million HKD, which is an increase of 550% year-on-year [9]. Group 3: Investment Strategies - Investors have adopted various strategies, with some achieving high returns through direct investments in innovative drugs, while others prefer ETFs for a more stable approach [10]. - One investor reported a 110% return on an ETF investment in innovative drugs, while another faced a 30% loss after investing heavily in Yaojie Ankang [10]. Group 4: Market Dynamics - The surge in the Hong Kong pharmaceutical sector is attributed to its inherent characteristics, such as high speculative value and event-driven dynamics, which attract short-term capital [11][12]. - The market's structure, including a lack of price limits and low liquidity, facilitates significant price volatility, making it easier for small amounts of capital to influence stock prices [25][19]. Group 5: Regulatory Considerations - Experts suggest that the index inclusion rules should be optimized to focus more on a company's fundamentals and liquidity, reducing the likelihood of stocks being manipulated [28]. - The current index inclusion criteria heavily rely on quantitative metrics, often overlooking the underlying business stability and profitability of companies [26].