From 2021 to 2023, the pharmaceutical sector has fallen for 3 years. Since September last year, with the digestion of valuations and the gradual clearing of unfavorable factors, funds from all walks of life have begun to "buy when no one cares". Does the current pharmaceutical sector reach the best layout area?Especially with the start of the Fed's interest rate cut cycle, is the dawn really coming in the pharmaceutical sector, and which segment is the most noteworthy?After the Federal Reserve pauses interest rate hikes, according to the latest CME data, there is a high probability that interest rate cuts are expected to be achieved in 24 years. Due to their high dependence on capital, innovative drugs are particularly sensitive to changes in overseas interest rates. The landing of interest rate cuts has brought loose liquidity, and innovative drugs may usher in a good era of investment, related productsInnovative drug ETF E Fund (**516080, connection**a c:019666 019667) and Hong Kong Stock Connect Pharmaceutical ETF (**513200, connection**a c:018557 018558).
The easing of global liquidity is expected to bring more room for valuation repair for innovative drugs
The recent larger-than-expected decline in U.S. inflation has come to an end to the current round of Fed rate hikes, and as more recession signals gradually emerge, the current CME data shows that the probability of a rate cut in May 2024 is as high as 90%. The improvement of overseas liquidity is conducive to the investment and financing environment of innovative drugs, which is expected to bring more room for valuation repair of innovative drugs.
The growth style** prevails when Treasury rates fall
The downward trend of U.S. bond interest rates is reflected in the changes in China's assets, the recent appreciation of the RMB exchange rate, and the marginal slowdown of the net outflow of northbound funds. The medium-term allocation of innovative drugs is still cost-effective.
"New demand for large single products" is an important trend of innovative drugs, and internationalization has ushered in an expected inflection point
Domestic pharmaceutical companies will enter a new round of innovative product cycle after PD-1 antibodies. In recent years, domestic pharmaceutical companies have continued to increase investment in innovation, and a number of high-quality innovative drugs with clinical value have been commercialized one after another, continuously improving the product structure of the domestic pharmaceutical industry, and this improvement is expected to accelerate in the next few years. The new round of product cycle will be diversified and internationalized, and is expected to last longer, and domestic pharmaceutical companies will also enter a new round of growth stage.
From the perspective of the gradual slowdown of U.S. bond interest rates, innovative drugs in the pharmaceutical segment and Hong Kong stocks are more flexible. After the sharp decline in the share price of the pharmaceutical sector, the risks and uncertainties of innovation have been fully reflected in the current valuation, the market has undergone a round of clearing, and gradually screened out high-quality companies, and in 2024, innovative drugs and Hong Kong stock pharmaceuticals have high profitability elasticity and the current valuation level is lowInnovative drug ETF E Fund (**516080, connection**a c:019666 019667) and Hong Kong Stock Connect Pharmaceutical ETF (**513200, connection**a c:018557 018558) may have higher cost performance!
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