In the world of investing, I have always believed in the belief that "everything has a cycle!".Or to put it in layman's terms: there is no eternal **, and there is no eternal **.
Pharmaceutical stocks that have been telling "ghost stories" for several years are very much in line with this law. Since the beginning of September, the pharmaceutical sector has been staged for more than two months, during which the share of some pharmaceutical-themed ETFs has continued to rise, and the sentiment of low-level funds is high.
But in fact, the pharmaceutical sector has been adjusted for 3 years since the industry high in mid-2020, and many ** adjustments have exceeded 70%, and the result is that the price-earnings ratio of the entire sector is at the low level of the historical quantile. At the same time, the allocation ratio of institutions has also fallen to a historical low.
The logic of the growth of the pharmaceutical industry has not changed, in the context of China's deep aging, the demand for health care has only increased, and the semi-annual report of the pharmaceutical sector has shown signs of accelerating recovery.
Zhou Yi No" proposes "no pole Tailai", that is, when adversity reaches the extreme, it will transform into good times. This sentence is still applicable in the current medical sector.
From the perspective of capital flow, southbound funds have recently continued to increase their allocation to Hong Kong pharmaceutical stocks. According to the data on changes in the capital flow of the Wind Hong Kong Stock Connect industry, as of December 15, since the beginning of this year, the Wind pharmaceutical, biotechnology and life sciences industries have a net **5575.6 billion yuan, ranking second among all industries.
PharmaceuticalGrowth logicNopechange
Fortune is like a snowball, and you need to choose long slopes and thick snow. ”
Warren Buffett shares his wealth secrets in the book "Snowball". And that's exactly what he did, starting at the age of 6** and now at the age of 91, with an investment career of more than 80 years. Its wealth has also gradually increased with age, from tens of thousands of dollars at the beginning to hundreds of billions of dollars today.
Looking at the global market, the pharmaceutical industry is such a natural good track that can provide long slopes and thick snow. Jeremy J. Siegel in his book "The Future of Investors" has mentioned the data of the 20 best-performing "survivors" in American history (1957-2003), of which 5 are from the pharmaceutical industry, including Pfizer, Merck, Abbott and other world-renowned pharmaceutical companies.
This long-term growth logic is still relevant today. China is in the midst of a rapidly developing population ageing. According to the results of the United Nations World Population Prospects 2022, by 2050, the size of China's elderly population aged 60 and above will exceed 500 million, accounting for 3881, the proportion of the elderly population aged 80 and above will exceed 10. The huge elderly population will put forward higher requirements for China's medical industry.
In the context of an aging population and an increasing prevalence rate, residents' long-term demand for high-quality medical care supports the certainty and growth of the pharmaceutical sector, while the improvement of health awareness and changes in the disease spectrum will continue to generate more demand for health consumption. For medical directions such as tumors and hypertension, innovative drugs are the direction that can be broken through, and compared with the historical experience of American biotechnology, the prospects are very broad.
At present, there is still a significant gap between China's medical and health expenditure and that of developed countries, and there is a lot of room for improvement. In terms of total volume, World Bank data shows that the per capita health expenditure of Chinese in 2020 was 583 US dollars, while the United States and Japan spent US dollars in the same period, and it is expected to further increase in the future.
From the perspective of medium-term investment logic, the direction of policy focus on people's health remains unchanged. In recent years, the frequent introduction of relevant policies reflects the country's urgent need for first-class medical construction, and with the introduction of multiple policies such as the "14th Five-Year Plan" and "Healthy China 2030", the top-level design encourages the vigorous development of medical health, and the general direction of the policy remains unchanged.
GF** recently released the "2024 Investment Strategy of the Pharmaceutical and Biological Industry: Spring Ploughing 2024, Autumn Harvest 2025", and its core view is "inflection moment, firm confidence".
GF** pointed out that from the perspective of the global value chain, the domestic pharmaceutical industry chain has multiple advantages such as talent and cost. In the context of marginal improvement in the policy environment, the innovation, transformation and upgrading of domestic pharmaceutical enterprises are advancing rapidly, the contribution of China's innovation to new fields in the world has steadily increased, and the value of innovation is expected to be gradually realized in the global markets such as China, Europe and the United States.
Medicine looks at Hong Kong stocks
There is a saying in the investment world: "Consumption looks at A-shares, technology looks at U.S. stocks, and medicine looks at Hong Kong stocks." "Hong Kong** has brought together a number of innovative and international leading Chinese pharmaceutical companies, and the target is scarce.
Since the Hong Kong stock market allows qualified biotechnology companies that have not yet made a profit or have no income to be listed, many innovative pharmaceutical companies, new biopharmaceutical companies and other biotechnology companies have completed the listing of Hong Kong stocks, with strong scarcity of targets and strong ability to characterize China's innovative drug sector. For example, CSPC Pharmaceutical Group, JD Health, Innovent Biologics, GenScript and so on are all pharmaceutical companies that do not have A-shares.
Although the pharmaceutical track of Hong Kong stocks has been adjusted in the early stage, from the perspective of the scarcity of listed companies and the valuation level of the sector, it is still an indispensable track for Hong Kong stocks.
Based on the Hong Kong stock pharmaceutical representative index, the CSI Hong Kong Stock Connect Medical and Health Composite Index (930965CSI) as an example, the index selects 50 listed companies in the medical and health industry with good liquidity and large market capitalization from the scope of Hong Kong Stock Connect as the index sample, including the leading pharmaceutical companies in Hong Kong stocks, 70% of the weight is concentrated in the innovative drug industry chain, and the industry distribution covers many important pharmaceutical tracks such as innovative drugs, pharmaceutical business, CXO, medical devices, and traditional Chinese medicine.
As of November 30, 2023, the top 10 heavyweights in the index include cutting-edge innovative pharmaceutical companies such as WuXi Biologics, BeiGene, Innovent Biologics, CSPC Pharmaceutical Group, JD Health, and WuXi AppTec, with a total weighting of about 5849%。(Data**: CSI Index Company, index constituent stocks do not represent **recommended).
The valuation of the index is already at a relatively low point, and wind data shows that as of November 29, 2023, the valuation of the CSI Hong Kong Stock Connect Medical and Health Composite Index continues to be low, with the latest price-to-book ratio of 2.B13 times, lower than the index of 83 in the past 5 years02% of the time, with a certain configuration cost performance. As short-term constraints are removed, it is only a matter of time.
Previously, Qian Jing, deputy director of investment of Ping An ** ETF Index Center, was jointly organized by Ping An of China and Shenzhen ** Exchange"Seize the opportunities of the times to build an ETF ecosystem"At the lecture hall event, he expressed optimism about innovative drugs, "With the improvement of approval standards and the rise of the industrial learning curve, China's innovative drugs have undergone 'qualitative changes'. However, the technology-biased nature of the innovative drug industry determines that the sector is facing a high research threshold while obtaining higher potential returns. Through the indexation investment method, it helps to diversify risk. “
"Thanks to the introduction of favorable policies, many cutting-edge innovative pharmaceutical companies, new biopharmaceutical companies and other biotechnology companies have completed their listings on the Hong Kong stock market, and innovative drugs have become a major advantage of Hong Kong stocks." Hong Kong-listed pharmaceuticals have also become an indispensable part of China's pharmaceutical investment. ”
It is expected to usher in the "Davis double-tap".
There is no doubt that the layout of Hong Kong stock medicine at this point in time is a good choice, and it is expected to usher in the "Davis double-click".
Investors can deploy Hong Kong stocks and pharmaceuticals through ETFs, which have the advantages of low cost, diversified investment, passive operation, diversified investment, low purchase threshold, strong liquidity, etc., which can help investors better achieve asset allocation and portfolio optimization.
As the saying goes, cheap is the last word. Recently, the funds in the pharmaceutical sector have bucked the trend with enthusiasm, and the share of related EFT has grown rapidly. Sir noted that Ping An CSI Hong Kong Pharmaceutical ETF (159718) has recently received a lot of market attention, with a total of 7315 gold in the past 20 trading days060,000 yuan (as of November 29, 2023), an increase of 258% from the beginning of the year.
The Hong Kong Pharmaceutical ETF (159718) tracks the CSI Hong Kong Stock Connect Medical and Health Composite Index, providing investors with a high-quality tool to identify representative pharmaceutical companies in Hong Kong stocks. The ETF is also one of the first ETFs to be listed tracking the CSI Hong Kong Stock Connect Healthcare Composite Index.
The manager Ping An has a wide range of layout and innovation in the field of ETF product research and development, and its product line covers six product lines: broad-based index, bond index, thematic index, strategy index, overseas index and currency, and is in a leading position in product development and index compilation in China.
After years of deep cultivation, Ping An ** has made some achievements in the layout of ETFs, not only has a relatively complete ETF product line, has set a number of domestic firsts in product research and development and index compilation, and has repeatedly set a record for the first time in the industry, and also has its own accumulation in investment research.
In the past few years, medicine has been the "best track" in the eyes of investors, but in the context of a sharp correction, market sentiment has also shifted from greed to panic. After the overshoot, valuations have reached a relatively low level, and it is time to be "greedy".
As the market expects the Fed to enter the end of its interest rate hike cycle, it is expected to enter the channel of interest rate cuts in the future, and the stimulus for Hong Kong stocks will be greater than that of A-shares. In addition, the weight of Hong Kong stocks is concentrated in the highly flexible innovative drug industry chain, and the valuation repair logic of Hong Kong stocks is superimposed, and the layout of Hong Kong stock pharmaceutical ETFs (159718) at this point in time is a very good choice, and it is expected to obtain excess returns in the future.