Huabao Fund's Hong Kong Stock Connect Innovative Medicine ETF (520880) rose 6.63% weekly, leading the market.
On April 3, A-shares opened higher but closed lower, with the Shanghai Composite Index falling another 1%, losing the 3900-point level again. The red-hot pharmaceutical sector recently saw a sudden adjustment. The largest medical ETF in the entire market, HuaBao Medical ETF (512170), closed down 2.65%, falling below the 20-day moving average. The only HuaBao Pharmaceutical ETF (562050) in the market fell 1.45%, ending its two-day winning streak.
Hong Kong stocks were closed for the Good Friday holiday. The trading prices of HuaBao Stock Connect Innovative Drug ETF (520880) and HuaBao Stock Connect Medical ETF (159137) in the A-share market were entirely determined by capital flows, both falling around 1% today.
Why did the pharmaceutical sector suddenly "turn sour"? On April 2 (US Eastern Time), the White House officially announced a 100% tariff increase on imported patented drugs and pharmaceutical ingredients. This move aims to pressure pharmaceutical companies through tariffs to relocate production back to the US or accept pricing agreements.
The news immediately drew high market attention. As it was the last trading day before the Qingming holiday, concerns intensified, coupled with a decline in market risk appetite, leading some funds to sell pharmaceutical assets.
Returning to reason, how significant is the impact of the US move on China's pharmaceutical industry? The conclusion first: the direct impact is limited.
Looking at the export structure of Chinese pharmaceutical companies to the US, it is currently dominated by active pharmaceutical ingredients (API) and generic drugs, not patented drugs. According to data from the China Chamber of Commerce for Import & Export of Medicines & Health Products, of the total $19.047 billion in pharmaceutical product exports from China to the US in 2024, API exports accounted for $4.52 billion, representing 70.35% of western medicine exports. These products are not within the scope of this tariff increase.
Focusing on the innovative drug industry chain, the core model for Chinese innovative drugs going global is primarily technology licensing (License-out), which does not involve the export of physical drugs, naturally avoiding tariff barriers. Domestic CXO companies mainly supply intermediates and APIs, not finished patented drugs.
Some analysis points out that the actual impact of this policy on China's pharmaceutical industry chain is limited. Instead, it may accelerate the restructuring of the global supply chain, benefiting CXO companies with global production capacity layouts and innovative pharmaceutical companies that rely on BD deals as their main global expansion model.
Guotai Haitong Securities clearly stated that it is optimistic about the prospects of Chinese innovative drugs going global. The impact of this tariff increase on potential BD deals is limited, and it continues to recommend innovative drugs and the innovative drug industry chain. *
In the secondary market, supported by accelerating fundamental recovery, the AH pharmaceutical sector has frequently led the broader market recently. Multiple positive factors such as leading companies turning losses into profits + a surge in overseas expansion + conference catalysts have overlapped, with innovative drugs performing particularly well. On April 1, the 100%-innovative-drug R&D target—HuaBao Stock Connect Innovative Drug ETF (520880) surged nearly 7% in a single day, setting a record for its largest single-day gain.
This week, 520880 accumulated a gain of 6.63%, with weekly gains for consecutive weeks, significantly outperforming the Hang Seng Index (0.66%). Its weekly turnover reached 3.503 billion yuan, the second-highest since its listing! Looking at the weekly K-line arrangement, a V-shaped pattern is emerging, potentially signaling a market turning point.
Market analysis believes that from the perspective of industry trend logic and market reaction, innovative drugs/pharmaceuticals are expected to become the strongest market-wide theme in April. Zhongtai Pharmaceutical suggests: Actively seize the opportunity for a bottom rebound in innovative drugs. *
To invest in innovative drugs, target HuaBao Stock Connect Innovative Drug ETF (520880), which 100% allocates to innovative drug R&D companies. The top ten holdings account for over 70%, highlighting its leading stock characteristics. For those seeking to reduce volatility, choose HuaBao Pharmaceutical ETF (562050) with its unique allocation of "70% innovative drugs + 30% traditional Chinese medicine", combining the high growth of innovative drugs with the high dividends of TCM.
To invest in the medical sector, target the largest medical ETF in the entire market, HuaBao Medical ETF (512170), heavily weighted in medical services (CXO) + medical devices, while also covering medical aesthetics and AI healthcare. For a highly flexible "T+0" tool, pay attention to HuaBao Stock Connect Medical ETF (159137), with a CXO concentration exceeding 40%, covering hot themes such as AI healthcare, brain-computer interfaces, and innovative drugs and devices.
Data source: China Securities Index Co., Ltd., Shanghai, Shenzhen, and Hong Kong Exchanges, etc. Note: ETF funds do not charge sales service fees. When investors subscribe for or redeem fund units, subscription/redemption agent brokers may charge a commission not exceeding 0.5%, which includes related fees charged by stock exchanges, registration institutions, etc. For fund fee details, please refer to the respective fund's legal documents.
Institutional views source: Guotai Haitong Securities 20260403 "The US announced a 100% tariff increase on imported patented drugs and pharmaceutical ingredients, with limited disruption to China's innovative drug industry chain"; Zhongtai Pharmaceutical April 20260403 Monthly Report Conference Call;
Risk Warning: The index constituents mentioned in this article are for display purposes only. Descriptions of individual stocks do not constitute investment advice in any form, nor do they represent the holdings information or trading trends of any fund under the management company. The risk level of the Medical ETF, Pharmaceutical ETF HuaBao, and their feeder funds assessed by the fund manager is R3-Medium Risk, suitable for Balanced (C3) and above investors. The risk level of HuaBao Stock Connect Innovative Drug ETF and its feeder funds, Stock Connect Medical ETF and its feeder funds, and Medical ETF feeder funds is R4-Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, expressions of any form, etc.) is for reference only. Investors are responsible for any independent investment decisions. Furthermore, any views, analysis, and forecasts in this article do not constitute investment advice of any form to readers, nor do they bear any responsibility for direct or indirect losses arising from the use of this article's content. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Past fund performance does not indicate its future performance. Fund investment involves risks.
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