GLONGHUY July 4 | Lyon published a report stating that US Treasury Secretary Yellen's visit to China this week may ease tensions between China and the US and stabilize relations between the two sides. Furthermore, considering the revenue contribution of recently approved new drugs in the second half of the year, the bank expects the macroeconomic environment of China's healthcare industry to improve, and the pressure on short-term liquidity financing is expected to ease somewhat. The bank believes that recent health insurance data in the Mainland shows that consumption capacity is good, and that the medical device procurement plan under the “14th Five-Year Plan” has also exceeded market expectations. It believes it can speed up the progress of hospital equipment procurement. Coupled with strong industry fundamentals, the bank remains optimistic about the growth prospects of the mainland medical stock industry. Furthermore, although medical stocks listed in Hong Kong are affected by shrinking liquidity, the bank still expects the situation to improve with sound industry fundamentals. The bank favors prescription drugs, medical devices, biotechnology and pharmaceutical contract outsourcing (CXO) stocks. Among them, Shiyao (1093.HK), Kangzhe Pharmaceutical (0867.HK), Hengrui Pharmaceutical (600276.SH), Kangfang Biology (9926.HK), Huadong Pharmaceutical (000963.SZ), Sinopharm Holdings (1099.HK), Hanson Pharmaceuticals (3692.HK) and Pharmaceutical Kangde (2359.HK) are preferred.