There is currently a difference in direction in the allocation of domestic and foreign capital. How far can HUTCHMED (00013) stock price follow the rebound of the sector?

Since April 17th this year, the stock price of HUTCHMED (00013) has been affected by the correction in the Hong Kong stock pharmaceutical sector and has shown a synchronous downward trend. It was observed that on April 17th, HUTCHMED's stock price closed slightly higher by 0.90%, breaking the "M-top" trend, and the daily trading volume at the formation of the right top was only 4.0136 million shares, showing a lack of vitality compared to the left top, reflecting the weakening buying power in the market, indicating that the momentum for price increase is gradually disappearing. On April 20th, HUTCHMED's stock price moved away from the upper BOLL line and closed down by 3.24%, starting a new round of downward trend. From the intraday trend, HUTCHMED's stock price's downward trend is highly consistent with the decline in the Hang Seng Healthcare Index: starting to decline around April 17th and reaching a temporary low on June 22nd. On June 22nd, HUTCHMED reached an intraday low of HK$15.57, resulting in a 35.88% decline in price range since the closing price of HK$24.72 on April 17th, while the Hang Seng Healthcare Index had a range decline of 27.65% during the same period. This means that HUTCHMED's price decline range is larger than the Hong Kong stock pharmaceutical sector. The decline in the stock price of HUTCHMED has perhaps been influenced by the low market sentiment and internal short-selling pressure. The market sentiment during this period has been affected by the significant decline in the innovation drug sector, which led to a downturn in the Hong Kong healthcare index. The continuous increase in stocks within the healthcare sector has created a situation of imbalance in supply and capital structure, where financing enthusiasm in some sectors has led to a depletion in intraday trading volumes. The decline in the stock prices during this period may also be attributed to the significant increase in short-selling activities from April 15th to April 21st, leading to a decline in stock price as short-sellers capitalized on market sentiment. The panic selling from retail investors and the game of catch with main investors further exacerbated the decline. However, starting from June 22nd, HUTCHMED's stock price began to rebound, and this trend is highly related to the performance of the industry at the same time. Investment funds have been flowing into the pharmaceutical and healthcare industries, seeking undervalued assets to rebalance their portfolios. The valuation of indices such as the Hang Seng Healthcare and Biotech sectors have fallen to the lowest levels, indicating that most negative factors have been priced in. In terms of PE valuation, HUTCHMED's current PE valuation is 4.30 times, significantly lower than the industry average of 22.28 times, showing a state of deep undervaluation. This has allowed HUTCHMED to rise alongside the broader healthcare index during a 7-day trading period, reaching the upper BOLL line. As the stock price of HUTCHMED began to rebound after June 22nd, foreign investment changed their strategy from selling to buying, indicating a potential bet on the company's 26Q2 performance announcement. Despite previous criticism of HUTCHMED's unstable revenue in the innovation drug sector, the company's financial report for 2025 showed a stabilization and increase in sales in the second half of the year, with a comprehensive revenue of $115 million, a growth of 16.4%. This growth was driven by an increase in sales of the three core products in the Chinese market, as well as an increase in market sales of one product by 26% overseas. Based on these results, the company expects a further increase in revenue in the oncology sector for 2026. The combination of long-term decline in stock price and expectations of improved performance has created an opportunity for investment in HUTCHMED before the release of its 26Q2 performance results.