On July 30, 2026, Hong Kong stocks showed a consolidation pattern throughout the day. The Hang Seng Index edged down 0.08% to close at 21,350 points, with trading volume shrinking to HK$110 billion from the previous day. However, the market was not universally weak; the biomedical sector emerged prominently, becoming the biggest highlight of the day. By the close, the Hang Seng Biomedical Index surged 3.2%, and multiple innovative drug stocks rose over 5%, driving net capital inflow of more than HK$2 billion into the sector.
Biomedical sector rallies against the trend
In early trading, the Hang Seng Index opened slightly lower and fluctuated narrowly around 21,300 points. Heavyweight stocks such as Tencent Holdings and HSBC Holdings performed tepidly, but biomedical stocks attracted buying interest from the open. BeiGene (06160.HK) announced that a new indication for its self-developed PD-1 inhibitor had been approved by the National Medical Products Administration, sending its shares up 6.8%. Innovent Biologics (01801.HK) also rose 5.5% on better-than-expected core product sales data. Additionally, stocks such as Akeso (09926.HK) and RemeGen (09995.HK) gained over 4%.
Industry analysts pointed out that the biomedical sector's surge was not accidental. Recently, the National Healthcare Security Administration issued 'Several Measures to Promote High-Quality Development of Innovative Drugs,' which explicitly optimizes the approval process for innovative drugs and raises the medical insurance reimbursement standard, directly boosting market expectations for innovative drug companies' profitability. At the same time, after a three-month adjustment, the valuation of Hong Kong's pharmaceutical sector has fallen to historical mid-to-low levels. Some leading companies have a PEG (price/earnings to growth) ratio below 1.5x, offering a high margin of safety.
Dual drive from policy and fundamentals
From a policy perspective, since 2026, the Chinese government has continuously strengthened support for innovative drugs. In addition to medical insurance payment reform, the speed of drug review and approval has significantly accelerated. In the first half of this year, 17 domestic innovative drugs were approved for market, a year-on-year increase of 30%. Moreover, the impact of volume-based procurement on generic drugs has marginally weakened, while innovative drugs benefit from differentiated competition, and their profitability is gradually improving.
On the fundamentals, disclosed interim reports show that the total revenue of Hong Kong-listed 18A biotech companies (pre-revenue biopharmaceutical companies) grew 45% year-on-year. Although R&D expense ratios remain high, losses have generally narrowed. For example, BeiGene's product revenue reached US$1.2 billion in the first half of 2026, up 52% year-on-year, with gross margin improving to over 80%. Innovent Biologics' core product sintilimab achieved sales exceeding RMB 3 billion in the first half of the year, firmly leading the domestic PD-1 market share.
Institutional view: Pharmaceutical sector expected to lead in H2
Several investment banks have released research reports stating that the Hong Kong pharmaceutical sector is entering a window for positioning. Morgan Stanley said that the logic of Chinese innovative drugs going overseas is gradually materializing. Companies such as BeiGene and Legend Biotech have been approved for listing in the US, and future overseas revenue will become a new growth engine. The bank raised its target price for BeiGene to HK$180. China International Capital Corporation (CICC) pointed out that as expectations of a Fed rate cut rise, improved liquidity in Hong Kong stocks will benefit the valuation recovery of growth stocks. As a high-elasticity sector, the pharmaceutical sector is expected to outperform the broader market in the second half of the year.
In terms of fund flows, southbound capital net bought HK$1.5 billion of Hong Kong stocks today, with the biomedical sector receiving net buying of HK$850 million, accounting for 56% of the total. On the foreign side, northbound capital (Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect) net bought A-share pharmaceutical stocks today, while also increasing allocation to Hong Kong pharmaceutical stocks via the Stock Connect.
Risk reminder and outlook
Despite the strong performance of the pharmaceutical sector, investors still need to be wary of short-term volatility. Some individual stocks have risen sharply in the early stage and face profit-taking pressure. In addition, innovative drug R&D is highly risky; clinical trial failures or intensified competition may lead to sharp stock price declines. It is recommended that investors focus on leading companies with core pipelines and strong commercialization capabilities, or diversify risks through index funds.
Looking ahead, the Hang Seng Index continues to consolidate on shrinking volume near 21,300 points, as the market awaits the outcome of the Fed's interest rate meeting next week. If external liquidity eases further, combined with the release of domestic policy dividends, Hong Kong stocks are expected to resume their upward trend. The biomedical sector, as a structural opportunity, is worth continued attention from investors.
