On the final trading day of August, Hong Kong equities faced broad declines with the Hang Seng Index and Hang Seng Tech Index both dipping over 1% intraday, while the innovative drug industry chain led losses. The pure-play innovative medicine gauge, the Hang Seng Hong Kong Stock Connect Innovative Drug Selected Index, plunged more than 4%. The Hong Kong Stock Connect Innovative Drug ETF (520880) tracking this index lost its 5-day, 10-day, 20-day, and half-year moving averages during the session, as heavyweight constituents such as Innovent Biologics, BeiGene, and Akeso all dropped over 4% in tandem.

Meanwhile, the Hong Kong Stock Connect Healthcare Thematic Index, which carries a CXO weighting exceeding 50%, slid more than 3.8%. The Hong Kong Stock Connect Healthcare ETF (159137) tracking this benchmark fell below its 20-day moving average, with the three major WuXi entities, WuXi AppTec, WuXi Biologics, and WuXi XDC, collectively declining by more than 4%. Hong Kong-listed innovative drug stocks, which are highly sensitive to interest rate movements, are influenced by Federal Reserve policy shifts.

On August 28 local time, Fed Chair Kevin Warsh delivered a hawkish tone at the Jackson Hole Global Central Bank Symposium, emphasizing that inflation still needs to clearly move back toward target. This rhetoric intensified market expectations for a September rate hike. However, short-term volatility does not disrupt the sector's core logic, as robust interim earnings across the innovative drug supply chain validate strong industry momentum and provide solid fundamental support.

Statistics show that among the 48 innovative drug development companies covered by the Hong Kong Stock Connect Innovative Drug ETF (520880), 45 have reported results, with 33 companies, or over 73%, posting year-on-year growth in net profit attributable to shareholders. For the Hong Kong Stock Connect Healthcare ETF (159137), 35 of its 44 constituent companies that have released interim reports are profitable, representing nearly 80% of the sample.

On the catalyst front, following the mid-year earnings season, innovative drug developers are entering a period of intensive clinical data releases. The WCLC (World Conference on Lung Cancer, opening September 12) and ESMO (European Society for Medical Oncology Congress, opening October 23) represent key disclosure windows. As highlighted by market analyst Feng Chencheng, validation of results from leading Chinese pharmaceutical companies' pipelines, particularly in bispecific antibodies and ADC platforms, could support valuation resilience across the innovative drug sector.

For full-chain exposure to innovative drugs, two T+0 trading instruments stand out: the Hong Kong Stock Connect Innovative Drug ETF (520880), which passively tracks the Hang Seng Hong Kong Stock Connect Innovative Drug Selected Index with 100% allocation to innovative drug R&D companies and roughly 70% of positions concentrated in R&D leaders, along with its over-the-counter feeder fund (025221); and the Hong Kong Stock Connect Healthcare ETF (159137), which passively tracks the Hong Kong Stock Connect Healthcare Thematic Index with heavy allocation to the innovative drug supply chain, comprising 50% CXO and 20% innovative drugs, with WuXi-related companies accounting for over 38% of the portfolio, alongside its OTC feeder fund (026922).

Data sources include public information from the Shanghai and Shenzhen-Hong Kong stock exchanges, CSI Index Company, and Hang Seng Index Company. Weighting figures are as of July 31, 2026. Regarding fee structures: ETF funds do not charge sales service fees. When investors subscribe to or redeem fund shares, the authorized securities dealer may charge a commission of no more than 0.5%, which includes fees levied by securities exchanges and registration institutions. For full fund fee details, please refer to the respective fund legal documents. It is particularly noted that the fund manager has assessed the Hong Kong Stock Connect Healthcare ETF, the Hong Kong Stock Connect Innovative Drug ETF, and their feeder funds as carrying a risk rating of R4 (medium-high risk), suitable for aggressive (C4) and above investors. The index constituents mentioned here are for illustration only, and any individual stock descriptions do not constitute investment recommendations, nor do they represent the holdings or trading activities of any fund under the fund manager's management. All information appearing in this article, including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and other forms of expression, is for reference only. Investors bear full responsibility for any independent investment decisions. Furthermore, any views, analyses, or projections herein do not constitute investment advice to readers, and the publisher assumes no liability for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not serve as a guarantee of fund performance. Past fund performance does not represent future results, and fund investing carries risks.