Group 1 - The Hong Kong stock market's pharmaceutical sector has seen significant investment interest this year, particularly in the innovative drug segment, with the Hong Kong Stock Connect Innovative Drug ETF (Southern, 159297) showing remarkable performance [1] - As of November 11, the scale of the Hong Kong Stock Connect Innovative Drug ETF (Southern, 159297) increased from 335 million to 1.355 billion, reflecting a growth rate exceeding 300%, indicating strong market recognition of the long-term value of the innovative drug sector [1] - The ETF closely tracks the National Index of Hong Kong Stock Connect Innovative Drugs, which includes leading companies like BeiGene, Innovent Biologics, and CanSino Biologics, enhancing its representation of the innovative drug industry [1] Group 2 - The innovative drug industry is crucial for advancing medical progress and improving human health, with companies categorized into two types: pure Biotech firms and BioPharma companies [2] - As of mid-2025, over 70% of Biotech companies are expected to achieve positive revenue growth, with approximately 66% surpassing 100 million in revenue, and nearly 15% exceeding 1 billion [2] - China's BioPharma sector is transitioning from single R&D to full industry chain integration, becoming a significant player in the global biopharmaceutical field, with a notable increase in overseas licensing amounts exceeding 92 billion in the first three quarters of 2025 [2] Group 3 - Looking ahead, the innovative drug sector is expected to maintain its momentum despite recent sentiment fluctuations, with ongoing business development (BD) activities supporting sustained industry vitality [3] - The trend of "innovation + internationalization" in the innovative drug industry remains unchanged, with improved fundamentals observed in the industry chain, including positive trends in financing data, orders, and performance [3]

Group 1 - The core viewpoint indicates that the innovative drug sector in Hong Kong is showing clear signs of bottoming out, supported by several factors [1] - BD (Business Development) transactions have started to recover since October, with historical data showing that transactions from October to January account for over 50% of the annual total, and transaction amounts can reach 60% to 70% of the yearly total [1] - Positive data from ESMO (European Society for Medical Oncology) has emerged, with several important clinical studies, such as AK112 and 3SB707, showing promising results, which is expected to catalyze further trading and stock price increases [1] - The valuation of innovative drugs has reached an absolute bottom, with some companies having little room for further decline [1] Group 2 - As of October 21, 2025, the National Securities Hong Kong Stock Connect Innovative Drug Index (987018) shows mixed performance among its constituent stocks, with notable gainers including CloudTop New Drug (01952) up 5.29% and Zai Lab (09688) up 1.80%, while major decliners include Juno Therapeutics-B (02617) down 6.82% [2] - The Hong Kong Innovative Drug ETF (159286) closely tracks the National Securities Hong Kong Stock Connect Innovative Drug Index and has seen a slight increase of 0.22%, with the latest price at 0.93 yuan [2] - As of September 30, 2025, the top ten weighted stocks in the National Securities Hong Kong Stock Connect Innovative Drug Index account for 71.83% of the index, including companies like BeiGene (06160) and Innovent Biologics (09926) [2]

- The report focuses on Hong Kong pharmaceutical indices and ETFs, highlighting the significant tracking scale of indices such as Guozheng Hong Kong Stock Connect Innovative Drugs and Hong Kong Innovative Drugs, with tracking ETF scales of 341.3 billion yuan and 226.4 billion yuan respectively [1][6][7] - Since August 2025, Guozheng Hong Kong Stock Connect Innovative Drugs and Hong Kong Innovative Drugs indices have seen net inflows of 145.1 billion yuan and 81.5 billion yuan respectively, ranking among the top two in terms of net inflows [7][10] - Seven indices focus on the innovative drug sector, with one compiled by Guozheng Index, two by China Securities Index, and four by Hang Seng Index. Indices compiled by the same company show similar compilation schemes and performance, while differences exist between companies. Year-to-date (YTD) returns show China Securities > Guozheng ≈ Hang Seng [7][12] - The industry distribution of indices varies: Guozheng and Hang Seng indices have a higher proportion of pharmaceutical industry, while China Securities indices have a higher proportion of biotechnology and life sciences tools and services [7][13] - Guozheng Hong Kong Stock Connect Innovative Drugs index experienced short-term deviation in September due to individual constituent stock adjustments during the sample adjustment period, but the deviation was corrected within two trading days, and the subsequent operation returned to normal [7][14]

Core Viewpoint - The recent volatility in the stock price of the Hong Kong innovative drug company, Yaojie Ankang, has raised significant market attention, particularly due to its inclusion in multiple indices, leading to passive buying by related ETFs and subsequent investor backlash on social media [1][2]. Company Overview - Yaojie Ankang was listed on the Hong Kong stock market on June 23, 2025, focusing on discovering and developing small molecule innovative therapies for tumors, inflammation, and cardiovascular metabolic diseases [3]. - Since its listing, the stock price had been on a slight upward trend until its inclusion in the Hong Kong Stock Connect on September 8, which triggered a surge in buying activity [3]. Stock Price Movement - Following its inclusion in the indices, Yaojie Ankang's stock price saw a dramatic increase, with a 77.09% rise on September 12 and a staggering 115.58% increase by September 15 [3][4]. - However, on September 16, the stock experienced a sharp decline, dropping 53.73% from a peak of 679.5 HKD to 192 HKD, illustrating extreme volatility [3][4]. Index Inclusion and ETF Impact - The inclusion of Yaojie Ankang in the National Index of Hong Kong Innovative Drugs on September 15 led to significant passive buying, with one of the largest ETFs purchasing 3 million shares, amounting to approximately 578 million HKD, which represented about 2.62% of the fund's net value [4]. - The total scale of the five ETFs tracking this index is approximately 35.963 billion HKD, indicating a passive buying impact of around 940 million HKD [4]. Index Adjustment Controversy - The adjustment process for the National Index of Hong Kong Innovative Drugs has come under scrutiny due to a lack of prior announcement regarding Yaojie Ankang's inclusion, which left many investors unaware [8][9]. - The index's sample selection criteria have been criticized for potential loopholes, as Yaojie Ankang had been listed for less than three months and did not fully meet the requirement of having a significant trading volume [9]. Passive Investment Dynamics - The incident with Yaojie Ankang is not isolated, as the influence of ETFs on individual stock volatility has been noted, especially with the ETF market surpassing 5 trillion HKD in scale [10]. - The expansion of ETF holdings is believed to enhance market liquidity, but it also increases the potential for short-term price volatility due to passive fund inflows and outflows [12].

Core Insights - The stock price of the Hong Kong innovative drug company, Yaojie Ankang, has experienced significant volatility, drawing widespread market attention due to its recent inclusion in multiple indices, including the Guozheng Hong Kong Stock Connect Innovative Drug Index [1][2] Group 1: Company Overview - Yaojie Ankang, listed on June 23, 2025, is a biopharmaceutical company focused on developing innovative therapies for tumors, inflammation, and cardiovascular metabolic diseases [2] - Since its listing, Yaojie Ankang's stock price had been steadily increasing until its inclusion in the Hong Kong Stock Connect on September 8, which triggered a surge in buying activity [2][3] Group 2: Stock Performance - Following its inclusion in the indices, Yaojie Ankang's stock price surged by 77.09% on September 12 and further increased by 115.58% on September 15 [2][3] - However, on September 16, the stock price plummeted by 53.73%, dropping from 679.5 HKD per share to 192 HKD per share, illustrating extreme volatility [2][3] Group 3: Index Inclusion and ETF Impact - The inclusion of Yaojie Ankang in the Guozheng Hong Kong Stock Connect Innovative Drug Index led to passive buying from ETFs, with one ETF purchasing 3 million shares, amounting to approximately 578 million HKD, which represented about 2.62% of the fund's net value [3][4] - The total scale of the five ETFs tracking the Guozheng Hong Kong Stock Connect Innovative Drug Index is approximately 35.963 billion HKD, suggesting a passive buying amount of around 940 million HKD [3][4] Group 4: Index Adjustment Controversy - The adjustment process for the Guozheng Hong Kong Stock Connect Innovative Drug Index has faced criticism for lacking transparency, as the index company did not announce Yaojie Ankang's inclusion in advance, impacting investors' awareness [4][5] - Concerns have been raised regarding the index's sample selection criteria, as Yaojie Ankang had been listed for less than three months and did not fully meet the requirements regarding average daily trading volume [5] Group 5: Market Dynamics and ETF Influence - The expansion of ETFs has significantly increased their influence on market dynamics, with passive funds becoming a powerful force affecting stock price movements [6][7] - As ETF sizes surpass 5 trillion HKD, the impact of passive buying and selling on individual stocks is expected to intensify, particularly during quarterly adjustments [6][7]

Core Viewpoint - The stock of the innovative pharmaceutical company, Yaojie Ankang, experienced significant volatility after being included in multiple indices, raising concerns about its liquidity and the implications for related ETFs [1][2][5]. Group 1: Stock Performance - Yaojie Ankang's stock price surged by 77.09% on September 12 and 115.58% on September 15, before plummeting by 53.73% on September 16, resulting in a market capitalization drop from nearly 270 billion HKD to 76.2 billion HKD [2]. - On September 17, the stock continued to show volatility, with an intraday increase of over 30% and a closing rise of 8.96% [1][2]. Group 2: Index Inclusion and ETF Impact - The inclusion of Yaojie Ankang in the Hong Kong Stock Connect Innovative Drug Index led to passive buying by ETFs tracking this index, which has a total asset size of 35.963 billion HKD across seven products [3][6]. - The largest ETF tracking this index is the Huatai-PineBridge Hong Kong Stock Connect Innovative Drug ETF, with a size of 21.739 billion HKD [3]. Group 3: Industry Concerns and Future Adjustments - Industry insiders have expressed concerns regarding the liquidity of Yaojie Ankang, suggesting that the index's methodology needs optimization to account for liquidity issues when including stocks [4][6]. - Fund companies have begun discussions with index providers to address these concerns, indicating that adjustments to the index methodology may be forthcoming [5][6].

Group 1 - The Hong Kong innovative drug sector is experiencing strong performance, with the Guozheng Hong Kong Stock Connect Innovative Drug Index rising nearly 2%, approaching the previous high point from August 19 [1] - The Hong Kong Innovative Drug ETF (159567) has seen a cumulative increase of over 110% this year, making it one of the six ETFs in the market that have doubled in value [1] - The ETF has recorded positive growth in fund shares for seven consecutive months from February to August, with circulating shares increasing more than 17 times [1] Group 2 - China’s innovative drug companies are well-positioned for global competition, supported by over a decade of rapid development in the sector [1] - The purchasing behavior of overseas multinational corporations (MNCs) has validated the innovative research and development capabilities of domestic companies, particularly in the oncology and respiratory fields [1] - The Hong Kong Innovative Drug ETF primarily tracks the Guozheng Hong Kong Stock Connect Innovative Drug Index, focusing on biopharmaceuticals and chemical pharmaceuticals, with 9 out of the top 10 constituent stocks being biotech companies involved in core innovative drug technologies [1]

Group 1 - The core viewpoint emphasizes that the investment value in innovative drugs is not a short-term pulse but a long-term industrial dividend, driven by technological breakthroughs, policy support, and capital recognition [1] - The National Index for Hong Kong Innovative Drugs and the China Securities Innovative Drug Industry Index have achieved significant year-to-date gains of 106.7% and 32.3% respectively as of July 31 [1] - The innovative drug industry in China has transformed from a "follower" to a "leader" over the past decade, with domestic innovations like IO dual antibodies and ADC drugs leading international trends [1][9] Group 2 - The recent adjustment of the Hong Kong Innovative Drug ETF (159567) to exclude CXO companies and increase sample adjustment frequency to quarterly aims to enhance the index's focus on core innovative drug enterprises [4] - The index now primarily includes biotech companies that directly lead drug development and hold core patents, reflecting their competitive products and advancements [4] - The adjustment is expected to improve the index's sensitivity to emerging growth forces within the innovative drug sector [4] Group 3 - The innovative drug industry is currently experiencing a "golden development period" supported by favorable policies, including a strategic goal to create a globally competitive innovation ecosystem [6][5] - Multiple government agencies have introduced supportive measures to optimize approval processes and facilitate financing for biotech companies, enhancing the overall industry environment [6][7] - By 2024, the expenditure on innovative drugs from the medical insurance fund is projected to be 3.9 times that of 2020, with an annual growth rate of 40% [7] Group 4 - The innovative drug sector is expected to see significant growth due to an aging population, with projections indicating that by the end of 2024, 15.6% of the population will be over 65 years old, leading to increased demand for innovative treatments [9] - The supply side is characterized by high technical barriers and a long development cycle, making quality innovative drugs relatively scarce and valuable [9][10] - China's innovative drugs currently account for less than 10% of the pharmaceutical market, indicating substantial room for growth compared to other G20 countries [10] Group 5 - The Hong Kong Innovative Drug ETF has achieved a year-to-date increase of 106.7%, leading the Hong Kong pharmaceutical sector [11] - The ETF focuses on biotech and pharmaceutical companies that are core to innovative drug development, ensuring high purity and precision in capturing industry growth [11] - The upcoming split of the Hong Kong Innovative Drug ETF on August 11 signifies the beginning of a long-term investment opportunity in the innovative drug sector [12]

Group 1 - The core viewpoint is that the innovative drug sector within the pharmaceutical industry shows clear growth potential and is currently trending positively, driven by decreasing costs and increasing approvals [1][2] - The sales expense ratio for pharmaceutical companies has decreased from 14.33% in 2021 to 12.18% in Q1 2025, while financial expense ratio has dropped from 0.69% to 0.38%, indicating improved profitability for innovative drug companies [1] - The number of innovative drug approvals in the first half of this year has already surpassed the total for the entire previous year, highlighting a robust growth trajectory [1] Group 2 - The Hong Kong innovative drug ETF (159567) has achieved a year-to-date net value growth rate exceeding 101%, ranking first among eight indices tracking Hong Kong innovative drugs [2] - The fund's share split on August 8 will lower the investment threshold, allowing for more flexible participation from investors [2] - The A-share innovative drug ETF (159992) and its linked funds have seen a net value growth rate of over 31% this year, indicating continued upward potential in the A-share innovative drug market [2]

Core Viewpoint - Multiple Hong Kong innovative drug companies' stock prices surged today, driven by related concept stocks, with the Hong Kong Innovative Drug ETF showing strong performance, including a half-day trading volume of 2.29 billion yuan for the Hong Kong Innovative Drug ETF (159570) [1][6]. Group 1: ETF Performance - The Hong Kong Innovative Drug ETF (520880) increased by 3.76%, with a trading volume of 2.04 billion yuan and a total size of 283 million units [3][6]. - Other related ETFs also saw significant gains, with the Hong Kong Innovative Drug ETF (159570) rising by 3.54% and achieving a trading volume of 2.29 billion yuan, while its total size reached 5.513 billion units [6][10]. - The performance of various ETFs in the innovative drug sector includes: - Hong Kong Innovative Drug ETF (520880): 3.76% increase, 283 million units - Hang Seng Innovative Drug ETF (520500): 3.74% increase, 466 million units - Hong Kong Innovative Drug ETF (159567): 3.57% increase, 2.031 billion units - Hong Kong Innovative Drug ETF (159570): 3.54% increase, 5.513 billion units [2][6]. Group 2: Investment Logic - The investment logic indicates that policy support for innovative drugs is improving, with an expected increase in the number and innovation of new drug launches. The structure of medical insurance fund expenditures is shifting towards innovative drugs, leading to a more reasonable pricing mechanism [3][7]. - The supply side is focusing on high-quality innovations and strengthening support for innovative drugs going abroad. The pharmaceutical industry has undergone valuation digestion, placing innovative drug valuations at a low point, which provides a basis for systematic rebound [3][7]. Group 3: Index Characteristics - The Guozheng Hong Kong Innovative Drug Index selects companies involved in innovative drug research and production, reflecting the operational characteristics of listed companies in the innovative drug industry. The index covers the innovative drug sector comprehensively, with a high proportion of other biological products and chemical preparations [7][10]. - The index is characterized by a market capitalization distribution skewed towards small and mid-cap stocks, with valuations at historical lows, indicating high investment cost-effectiveness [7][10].