Global X China Biotech ETF Riding on Positive Momentum - Global X ETFs Hong Kong

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Global X China Biotech ETF
Riding on Positive Momentum

By: Jeff Huang

China biotech sector recorded sector wise rally yesterday driven by supportive policy announcements and solid corporate earnings. Year-to-date, Global X China Biotech ETF (2820 HK) recorded solid return, showing signs of stabilization after consecutive years of soft performance. On the back of still-low valuation and investor positioning, we see favourable risk-return profile for China biotech sector as bolstered by domestic policy support, improving corporate earnings, more favourable macro factors, and ongoing globalization themes.

Supportive Policy Announcements

A draft regulation regarding VBP (volume-based procurement) optimization is being circulating over past few days. The document includes optimizing access standards, bidding rules, and implementations, and could largely mitigate the current unreasonable low bidding prices and improve the cash flow for biotech companies, if the draft is sustained. This also echo to 2025 Government Work Report (GWR) released in early March which mentioned the optimization and quality enhancement of VBP. Additionally, we are seeing a series of supportive policies including encouraging M&A by SOEs in biotech sectors and the supports for innovative drug developments that can propel long-term growth within the sector.

Improving Corporate Earnings and More Out-licensing Deals

On track commercialization progress leads to better earnings visibility, with several biotech companies including Hutchmed and Innovent better-than-expected profitability in the latest quarter. Several leading biotech companies could be reaching breakeven in 2025 as bolstered by strong sales growth, further supporting the positive sentiments around the segment. Additionally, Chinese companies are expanding globally as we see rising number and value of licence-out deals in past 2 years, further increasing revenue potential for the sector.

Global X China Biotech ETF
(2820/9820)
Listing Date 25 Jul 2019
Reference Index Solactive China Biotech Index NTR2
Primary Exchange Hong Kong Stock Exchange
Total Expense Ratio 0.68% p.a.1
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Source: Mirae Asset; Data as of April 2025.

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