Important Information
Investors should not base investment decisions on this material alone. Please refer to the Prospectus for details including the product features and the risk factors. Investment involves risks. Past performance is not indicative of future performance. There is no guarantee of the repayment of the principal. Investors should note:
- The investment objective of Global X China Biotech ETF’s (the “Fund”) is to provide investment results that, before fees and expenses, closely correspond to the performance of the Solactive China Biotech Index.
- The Fund is exposed to concentration risk by tracking a single region or country.
- The Index constituents may be concentrated in a specific industry or sector, which may potentially more volatile than a fund with a diversified portfolio.
- Biotech companies invest heavily in research and development which may not necessarily lead to commercially successful products, and the ability for biotech companies to obtain regulatory approval (for example, product approval) may be long and costly.
- Investment in Emerging Market, such as A-share market, may involve increased risks and special considerations not typically associated with investments in more developed markets, such as liquidity risk, currency risks, political risk, legal and taxation risks, and the likelihood of a high degree of volatility.
- The Stock Connect is subject to quota limitations. Where a suspension in the trading through the Stock Connect is effected, the Sub-Fund’s ability to invest in A-Shares or access Mainland China markets through the programme will be adversely affected.
- Listed companies on the ChiNext market and/or STAR Board are usually subject to higher fluctuation in stock prices and liquidity risks, over-valuation risk, differences in regulation, delisting risk, and concentration risk.
- There are risks and uncertainties associated with the current Mainland China tax laws, regulations and practice in respect of capital gains realized via Stock Connect on the Fund’s investments in Mainland China. Any increased tax liabilities on the Fund may adversely affect the Fund’s value.
- The trading price of the Fund’s unit on the SEHK is driven by secondary market trading factors, which may lead to a substantial premium or discount to the Fund’s net asset value.
- The Fund’s synthetic replication strategy may invest up to 50% of its net asset value in financial derivative instruments (“FDIs”), which may expose the Fund to counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk. The Fund may suffer losses from its usage of FDIs.
- The Manager may at its discretion pay dividends out of the capital of the Fund. Distributions paid out of capital, represent a return of an investor’s original investment or its gains and may potentially reduce the Fund’s Net Asset Value per Share as well as the capital available for future investment.
- The Fund may suffer from a losses or delays when recovering the securities lent out. This may potentially affect its ability to meet payment and redemption obligations. Collateral shortfalls due to inaccurate pricing or change of value of securities lent, may cause significant losses to the Fund.
Quarterly Earning Update – Global X China Biotech ETF (2820)
Industry Update
Global X China Biotech ETF (2820) recorded positive return in August. On 20 August, Chinese Premier participated in a fact-finding and research tour of the bio-medicine industry in Beijing, and called for high-quality sci-tech empowerment and policy support to boost the quality and promote the upgrading of China’s bio-medicine industry. Senior leadership also met Novo Nordisk Chairman and mentioned welcoming global biopharma to step up their cooperation with China. At the end of August, NHSA announced the final list of drugs eligible to attend NRDL/CIDL adjustment. Chinese biotech companies are mostly positive on the upcoming negotiation and think that terms are becoming more favourable and flexible. (Mirae Asset, August 2025)
New York Time reported that US Administration is drafting an Executive Order (EO) to restrict Chinese drugs and innovative therapies (mainly on the licensing activities). The White House spokesperson said the Administration was not “actively considering” the draft. Though still at early stage and highly uncertain, Chinese biotech companies could demonstrate better resilience under such uncertainty, as some leading companies are capable of running global trials by themselves, and Chinese drugs can also be out-licensed to EU/Japan even if the EO was enacted. (The New York Times, 10 September 2025)
Stock Comments
Jiangsu Hengrui (1276 HK) – Hengrui reported in-line 2Q25 results in August. 2Q revenue was Rmb8.6bn (+12.5% y/y) with product sales of around Rmb7.1bn (+15% y/y), accelerated from 11% y/y in 1Q25. 2Q Earnings was Rmb2.6bn, +25% YoY. The company’s HK IPO and multiple out-licensing deals achieved in 1H also provides sufficient cash for future pipeline development, acquisition / licensing-in and new commercial team build-up. (Company data, August 2025)
Collaboration income provides additional earnings driver for Hengrui. 2Q booked ~Rmb1.5bn from out-licensing deal to Merck achieved in March 2025. More deals, including the GSK’s US$500mn upfront payment, could be book in 2H25. Furthermore, Hengrui entered into a new licensing agreement in September with a US-based NewCo Braveheart Bio, for the ex-Greater China rights of the asset with US$65mn upfront (US$32.5mn cash plus equity interest in Braveheart valued at US$32.5mm), US$10mn near-term technology transfer milestone, as well as up to US$1.013bn clinical and commercial milestones plus sales royalties. There could be sustainable BD income over the next few years given Hengrui’s in-depth pipeline and extensive BD efforts. (Company data, August 2025)
BeOne Medicine (6160 HK) – BeOne reported solid 2Q25 results, with revenue of US$1.3bn, +18% QoQ and Net profit of US$94.3mn, both figures higher than consensus estimates. Strong sales momentum of BRUKINSA, especially in overseas market, supported margin expansion in the quarter. The company lifted up lower end of revenue guidance and Gross margin guidance for 2025. (Company data, August 2025)
Furthermore, on 25 August, BeOne announced that it has entered into an agreement to sell its royalty rights on the worldwide (ex-China) sales of IMDELLTRA for up to US$950mn to Royalty Pharma (Nasdaq: RPRX). As part of the deal, BeOne is eligible for 1) an upfront payment of US$885mn, 2) the option to sell remaining royalties within 12 months for up to US$65mn, and 3) share in a portion of the royalty on annual sales above US$1.5bn. The deal marks the milestone return from its AMGN partnership, and further enhance BeOne’s cash positioning to explore further future possibilities. (Company data, August 2025)
Preview
China Biotech remains as the best performing sector YTD driven by ongoing globalization themes, domestic policy support, improving corporate earnings, and more favourable macro factors. Recent major out-licensing deals showcased global recognition of the innovative quality of Chinese companies. We recognize an accelerating trend of increase in out-licensing deals volume and upfront payment over the past 2 years, with novel modalities accounting for an increasing share of out-licensing deals. This suggests that China-originated assets entering US/global market is becoming a new norm in biotech sector. Profitability improvement and commercialization ramp up for biotech companies could lead to improving investor sentiments towards China healthcare. Global X China Biotech ETF (2820) invests in 30 leading Chinese companies whose principal business is in research, development, manufacturing, and distribution of new drugs, therapies, or vaccines using biological materials. (Mirae Asset, September 2025)
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