Biopharmaceutical stocks outperformed in Hong Kong trading on Wednesday, with Fudan Zhangjiang (01349.HK) spearheading the advance with a 16% gain. The Shanghai-based photodynamic therapy specialist saw heavy buying volume triple its 30-day average, reflecting growing investor confidence in China’s innovative drug pipeline.
Broad-Based Sector Strength Emerges
The rally extended across multiple biotech subsectors:
- CRO Services: WuXi XDC (02268.HK) climbed 3.2% after signing new ADC drug development contracts
- Clinical-Stage Biotechs: Ascentage Pharma (06855.HK) advanced 3.5% ahead of Phase III leukemia trial data
- Immuno-Oncology Players: ImmuneOnco (01541.HK) rose 3.8% following CAR-T therapy regulatory progress
Catalysts Driving the Upswing
Market participants attributed the movement to:
- Regulatory Tailwinds: China’s NMPA approval of 12 innovative drugs in Q2, the fastest pace since 2022
- Global Licensing Activity: Three cross-border pharma deals exceeding $500 million announced this month
- Short Covering: Biotech had been the most shorted HK sector in May with 18% average short interest
Valuation Considerations
The sector’s rally comes despite:
- Fudan Zhangjiang still trading 40% below its 2021 peak
- WuXi XDC facing 22% EPS downgrades this quarter
- Short-term technical indicators showing overbought conditions
Analysts at Jefferies noted selective opportunities in companies with near-term commercialization milestones, while cautioning about liquidity risks among pre-revenue biotechs. The Hang Seng Healthcare Index has now recovered 15% from its May lows, though remains 28% below its 52-week high.
Trading turnover in biopharma names reached HK$4.8 billion by midday, accounting for 12% of total HKEX volume – the highest sector concentration since February. The activity suggests institutional investors may be rebuilding positions after months of underweight allocations to Chinese healthcare stocks.
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