Since July, pharmaceutical stocks have opened the "adjustment mode", and the earnings of pharmaceutical ETF have also withdrawn. According to Wind statistics, 90% of pharmaceutical ETF returns are still negative so far this year.

Recently, the share of a number of pharmaceutical ETF has rebounded. One side is poor earnings, the other is buying against the trend, investors "the more they fall, the more they buy" operation reappears.

Net increase in ETF share of several pharmaceutical companies

As of Aug. 10, more than 90% of pharmaceutical ETF has had negative returns so far this year, according to Wind. Among them, 21 pharmaceutical ETF, such as Taikang National Certificate Public Health and Health ETF, Huabao Zhong Zheng Medical ETF, Cathay Pacific CSM Biomedical ETF, Ping an Zhong Zheng Medicine and Medical device Innovation ETF, have dropped by more than 20% so far this year.

But recently, the enthusiasm of the funds for the medical ETF has become more and more high. According to Wind, since July, Yi Fangda's share of medical and health ETF has increased by 3.541 billion shares, Huabao's share of Medical ETF has increased by 2.847 billion shares, and Cathay Pacific's shares of China Biomedical ETF and Tianhong National Biopharmaceutical ETF have increased by 445 million and 232 million respectively.

According to the second quarterly report of public offering funds, the market value of public offering funds' holdings in the pharmaceutical and biological sector fell to 9.4% of the total positions by the end of June 2022, the lowest level since the third quarter of 2011.

The advantage of cost-effective valuation in the industry is highlighted.

Some institutional personages said that the valuation performance-to-price ratio of pharmaceutical stocks is gradually improving. Take the CSI Medical Index tracked by Medical ETF as an example, its latest valuation is less than 30 times, the lowest in nearly seven years, so investors actively buy pharmaceutical ETF to seize the corresponding investment opportunities. Huabao Fund Index Research and Investment Department General Manager, Huabao Medical ETF Fund Manager Hu Jie believes that the pharmaceutical sector has experienced a large correction in the early stage, the current valuation price is relatively high.

Huaan Fund said that in terms of the profitability and growth of the pharmaceutical industry as a whole, the boom has been continuing. From the valuation level, close to the bottom of history, it is attractive. On the whole, medicine has the attributes of both consumption and science and technology, and the current plate has an outstanding performance-to-price ratio.

Yongjin Investment believes that there are more pharmaceutical industry segments, strong demand certainty, enough excellent enterprises are growing, and the valuation of the pharmaceutical industry has tended to be reasonable. In the current market environment, the pharmaceutical industry should not be overly pessimistic.

Luo Shifeng, research director of Nord Fund, believes that looking forward to the second half of the year, high-quality enterprises that can pass through the cycle and have resilience will have greater investment value, such as food and beverage, pharmaceutical and other sectors with demand and supply-side resilience in line with the general trend of consumption upgrading and aging.

Xu Xiaojie, deputy director of the Equity Investment Department of Everbright Prudential Fund, said that after previous adjustments, the valuation of pharmaceutical stocks has fallen back to a historically relatively low range, and the proportion of institutional positions is also at a relatively low level. However, the structural problem of relatively high concentration of holdings has yet to be digested. In the short term, the medical demand is relatively rigid, which is relatively less affected by the economy and some external factors; in the medium term, the recovery of rigid demand after the epidemic is more definite.