As 2017 wanes to the close, capitals are looking for new investment directions. Data shows that several medicine-themed ETFs see great net subscription since December, and the biological medicine industry is frequently researched by institutions in recent period. Several industry insiders claim that the medicine industry is experiencing the reform of policies. Especially, the reform of policies at the supply side might profoundly change the structure and development direction of the industry. Therefore, the medicine sector will grow more polarized in the future and efforts must be made to explore structural investment opportunities.
The medicine sector, just average in performance in recent two years, starts to pick up since Q4. Statistics from Choice Data, a data brand under East Money Information Co., Ltd., shows that total surge of the medicine sector since Q4 ranks first among 28 industries classified by Shenwan Hongyuan Securities as of Dec. 25. In the meantime, net value of several medicine-themed funds also rises. A medicine-themed fund under Zhonghai Fund (code: 000878), a medicine-themed fund under Hwabao WP Fund Management Co., Ltd. (code:240020) and a medicine-themed fund under Essence Fund (code: 000974) hiked 17.82 percent, 10.13 percent and 9.31 percent, respectively, in recent three months.
What’s more, shares of multiple medicine-themed ETFs keep expanding since December. Shares of the medicine-themed ETF under E Fund (code: 512010) see a net expansion of 17 million, representing an increase of 42.5 percent. Shares of the medicine-themed ETF under GF Fund Management (code: 159938) and HuaAn Funds (code: 512120) see a net growth of 5 million and 1 million, respectively. The subscription and redemption of ETFs are always deemed as the “wind vane” of the market since institutional investors are main players of ETFs.
Industry insiders analyze that the medicine industry, one of the few industries lagging behind in the general consumption sector, gradually picks up under the support of long-term bullish policies. Given that the market is weakening now, capitals turn their eyes to growth sectors again. Therefore, medicine-themed stocks with identifiable endogenous growth will be favored by institutions.
In addition, listed companies engaged in the biological medicine industry are also frequently investigated by publicly offered funds in recent period. Statistics from Choice Data shows that as of Dec. 22, publicly offered funds have investigated 161 listed companies, 19 of which are involved in the medicine industry. Yifan Pharmaceutical Co., Ltd. (002019.SZ) and Shenzhen Salubris Pharmaceuticals Co., Ltd. (002294.SZ) are investigated by 26 publicly offered funds and 20 publicly offered funds, respectively, ranking the first and third in terms of the number of investigators.
Noticeably, some stocks declined amid the rebound of the medicine sector. According to statistics, 33 medicine-themed stocks jumped over 20 percent, and 9 medicine-themed stocks hiked over 50 percent since Q4, while 38 medicine-themed stocks declined by over 20 percent and Hunan Er-Kang Pharmaceutical Co., Ltd. (300267.SZ) nosedived 43.7 percent in the same period.
As to market performance in 2018, it is agreed by multiple fund managers that the medicine industry is experiencing the reform of policies now. Especially, the reform of policies at the supply side might profoundly change the structure and development direction of the industry. Therefore, the medicine sector will grow more polarized in the future and efforts must be made to explore structural investment opportunities.
As to investment opportunities in the medicine sector, there is also fund manager quite optimistic about investment opportunities in innovative medicine and equipment innovation, especially leading enterprises with continuous capital input and clinical popularization ability of new medicines, such as excellent companies engaged in fields like pharmaceutical chemicals, vaccine and monoclonal antibody. The fund manager is also quite optimistic about investment opportunities in the replacement of imported medicines with domestic ones after generic drugs are approved.
Translated by Jennifer Lu
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