BOCOM INTL: Slight differences between domestic and foreign capital in the industry fluctuations, seizing the opportunity to layout the undervalued high-quality assets in the innovative pharmaceutical industry chain.

BOCOM INTL released a research report stating that this week (9/9-9/16) the Hang Seng Index rose by 1.9%, while the Hang Seng Healthcare Index fell by 3.0%, ranking 12th in the industry index and underperforming the broader market. Since September, the proportion of domestic holdings through the Hong Kong Stock Connect has remained stable, while foreign holdings in Hong Kong healthcare stocks have slightly decreased since the middle of the year. Currently, domestic investors continue to focus on innovative pharmaceutical companies, while foreign investors take a cautious stance on the sector as a whole, prioritizing immediate profitability visibility. This week, domestic investors increased their holdings in leading and innovative pharmaceutical companies, while foreign investors slightly increased their holdings in high cost-effective CXO companies and reduced their holdings in innovative pharmaceuticals that domestic investors increased their positions in. The bank mentioned that Trump recently announced plans to increase restrictions on the import of Chinese drugs, causing market concerns about the prospects of Chinese innovative drugs going abroad. However, the bank believes that the actual impact is limited, considering: 1) The main initiators of lobbying are American biotechnology companies and investors, with low participation from multinational corporations and limited actual influence; 2) The dependence of multinational corporations on innovative products from China Meheco Group has increased, making it difficult to push through executive orders. After the general rise in the innovative pharmaceutical sector, the importance of timing and selection of stocks has become more evident. The bank suggests gradually positioning in the sector on pullbacks and recommends focusing on innovative drugs and CXO sub-sectors.