Recently, with the sharp drop in the US stock market index and the need for dividend tracks in A-shares to switch, the growth strategy of public funds has once again shown profitable effects in the Hong Kong stock market. Reporter noticed that against the background of Chinese assets starting to become popular and the style of race track switching, the Hong Kong medical medicine race track, which has undergone a deep adjustment for three consecutive years, is becoming the main target for public funds to search for highly elastic targets, and even the phenomenon of the entire market fund giving up other race tracks to switch to medical theme funds has emerged.

Many all-market funds have become medical-themed funds, and the medical field has become the first choice for Hong Kong stock funds to switch.

On August 6th,$Hang Seng Healthcare Index (800804.HK)$ has soared 3.5%, becoming the vanguard of the market boom of Hong Kong stocks, among them, the heavy stocks of the fund $HIGHTIDE-B.HK$ jumped 34.56% in a single day, and the cumulative increase in the past five days was as high as 84.85%; public holding stock $GENSCRIPT BIO (01548.HK)$ surged 9.41% in a single day, with a cumulative increase of about 56.6% in the past month;$TIGERMED (03347.HK)$ rose 5.41% in a single day, with a cumulative increase of 26.76% in the past five trading days. In addition, the fund covers $MEDSCI (02415.HK)$ rose 26.19% in a single day, and rose as much as 58.68% in the past five trading days.

It is obvious that the start-up time of the medical medicine race track has been advanced by five trading days in the Hong Kong stock market, which to a considerable extent implies the rebalancing actions of public funds during the window period when the race track style is switching.

The holding information published by many public QDII funds also shows that fund managers not only significantly reduce their positions in US stocks, but also take back their positions in Hong Kong stocks that were reduced last year. At the same time, in the selection of varieties in the Hong Kong stock market, they tend to the medical medicine race track with the most severe decline, the longest adjustment time, and the clearest chip clearing level.

At the same time, reporters from Securities Times noticed that many all-market funds have become medical-themed funds in the second quarter of this year. This phenomenon also verifies that the pessimistic expectations of medicine make more and more fund managers operate in the race tracks based on maximum elasticity and oversold attractiveness:

As of the end of the second quarter, a large public fund with a growth strategy under the banner of Shenzhen has replaced all of its top ten heavy stocks with Hong Kong medical and pharmaceutical stocks, most of which have experienced deep declines of more than 30% this year.

A full-market funds product in Shanghai that focuses on A-shares has not only abandoned multiple industries that were previously held, but also turned completely to the medical medicine race track, and placed heavy positions of multiple stocks in Hong Kong medicine and pharmaceutical varieties, which also implies that fund managers believe that the medical medicine race track in the eyes of fund managers may have greater elastic opportunities.

At the darkest moment of the fast-falling funds, why not change the warehouse with medicine?

Even during the most brutal adjustment period, fund managers who hold positions in pharmaceuticals dare not abandon them and turn to dividend tracks for safety.

"First of all, the fundamentals of Hong Kong stocks in the pharmaceutical industry have indeed improved significantly, but the stock prices have not responded throughout the first half of the year. On the other hand, the adjustment range of the Hong Kong stock market itself is indeed large, but the sensitivity and resilience of the Hong Kong stock market are also strong, and medical and pharmaceutical stocks are almost the most resilient symbols in the Hong Kong stock market. Even if the decline is indeed significant, if the market opportunity changes, it may be able to achieve good performance in a very short period of time. Moreover, the cost of switching holdings in the Hong Kong stock medical and pharmaceutical sector is relatively high." A fund manager in the north explained the core logic behind his persistence in holding positions in the Hong Kong stock medical and pharmaceutical sector despite losses.

For fund products with more industries to choose from, significant losses but still persevering also show the potential resilience of the Hong Kong stock medical and pharmaceutical industry after a sharp decline.

A fund manager who holds a heavy stake in the Hong Kong stock medical and pharmaceutical sector in Shenzhen also persists in this sector despite losses of up to 20%, citing his heavy holdings in Beigene as an example. The stock has rebounded by about 30% in the past three months on the Hong Kong stock market. Conversely, if a fund manager sells heavily weighted medical and pharmaceutical stocks after a significant decline, it implies facing enormous replenishment costs when the market rebounds.$BeiGene (BGNE.US)$In conclusion, seriously declining medical and pharmaceutical stocks such as Mes Health are quickly becoming the targets of public funds and institutional investors in the medical rebound market, despite the complete disregard of their performance growth and cash reserves. In the case of the fund manager's coverage of Mes Health, the company's stock price has dropped significantly since the beginning of this year, despite the continuous growth of performance. The largest drop in the stock price this year has even reached 70%. The total market value of Mes Health was only HK$1 billion on July 30th, which even fell below its total cash reserves of HK$1.25 billion, and this contrast phenomenon completely disregarding performance growth and cash reserves has made seriously declining Mes Health the target of public funds and institutional investors in the medical rebound market. In six days since August 1st, the stock has risen nearly 60%.

Public funds explore consumer medical as their top choice with certainty, and innovative drugs have the most elastic space.

E Fund

CSI SWS Health Care Index$CSI SWS Health Care index (000808.SH)$Huaxia Fund also stated that the medical and pharmaceutical track in the market is worth monitoring closely. The medical equipment industry in China has made significant progress recently. On the one hand, domestically developed magnetic resonance imaging machines have begun mass production, marking a major breakthrough for China in the field of high-end medical equipment, breaking through long-term technological barriers and reducing the cost to 2.93 million yuan, a significant reduction in cost. On the other hand, the domestically produced coronary stent, with its unique technology of single-sided engraved slot coating and targeted elution, was published in The Lancet, demonstrating the technical strength of China's medical device industry, and through centralized procurement and other means, the price has been reduced to about 700 yuan, with an average price reduction of 93%. In addition, China has successfully developed the world's smallest all-magnetic levitation artificial heart, bringing new life support to patients with heart failure. At the same time, China has also become the fourth country in the world to have independent intellectual property rights in heavy-ion tumor therapy systems, demonstrating its achievements in cutting-edge cancer treatment technology. Finally, Chinese companies have also made significant progress in the field of digital subtraction angiography (DSA), launching products that meet international advanced levels. These achievements show that China's medical device industry is gradually transforming from low-end products to high-end products, and demonstrating stronger competitiveness in global markets.$China Meheco Group (600056.SH)$In conclusion, seriously declining medical and pharmaceutical stocks such as Mes Health are quickly becoming the targets of public funds and institutional investors in the medical rebound market, despite the complete disregard of their performance growth and cash reserves. In the case of the fund manager's coverage of Mes Health, the company's stock price has dropped significantly since the beginning of this year, despite the continuous growth of performance. The largest drop in the stock price this year has even reached 70%. The total market value of Mes Health was only HK$1 billion on July 30th, which even fell below its total cash reserves of HK$1.25 billion, and this contrast phenomenon completely disregarding performance growth and cash reserves has made seriously declining Mes Health the target of public funds and institutional investors in the medical rebound market. In six days since August 1st, the stock has risen nearly 60%.

Public funds explore consumer medical as their top choice with certainty, and innovative drugs have the most elastic space.

Wu Xingwu, the manager of the GF Healthcare Fund, pointed out that the current investment attractiveness of pharmaceuticals is gradually increasing. Considering that the number of individual stocks that have risen since the beginning of the year accounts for only about 10% of the sector, important reasons for the poor performance of the pharmaceutical industry include medical insurance pressure, high hospital bases, sluggish consumption, and unfavorable external environment. The main performers are individual polypeptides with higher prosperity, the traditional Chinese medicine sector with dividend attributes, and innovative drug companies with global competitiveness. The focus is on increasing the allocation of innovative drugs with global competitiveness.

Ye Zhennan, manager of Southern Hong Kong Stock Pharma Fund, also believes that there are many structural long-term opportunities in the Hong Kong stock pharmaceutical industry, such as pharmaceutical companies with stable operations and good cash returns, innovative drug industries that are constantly challenging the best drugs and have achieved good records in overseas markets, as well as the traditional Chinese medicine industry rooted in domestic inheritance and innovation. All of these are worth long-term attention.

Ye Zhennan said that in the selection of varieties in the Hong Kong stock pharmaceutical sector, the relatively advantaged directions in the Hong Kong stock pharmaceutical assets include leading innovative drug companies, traditional pharmaceutical companies with dividend attraction and cost-effective valuation, specialized medical services and consumer medical services. Recently, some innovative drug policies have made these sub-routes more confident, and there are still many events in the second half of the year, especially in the fourth quarter, that are expected to further reveal their value. At this time, long-term layout will be a decision with a higher winning percentage. In addition, in-depth research and corresponding allocation have been made for listed companies in the sectors of traditional Chinese medicine, active pharmaceutical ingredients, and pharmacies, and potential individual stock opportunities with new product cycles in the US stock market are also being continuously monitored. These symbols can provide differentiated investment value compared to the Hong Kong market.

Editor/Emily