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<Research>CMSI: 3 Reasons for Recent Underperformance of Pharma Sector vs HSI; Top Picks INNOVENT BIO/ HANSOH PHARMA/ KEYMED BIO-B
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Since May, the Hang Seng Biotech Index has underperformed the HSI by about 1,300 bps, becoming the biggest laggard sector and marking the industry’s entry into a downturn phase, CMSI said in its report. The broker summarized three reasons for the evident recent underperformance of Hong Kong-listed pharma/biotech stocks: liquidity constraints, rising policy uncertainty over overseas BD cooperation, and valuation markdowns for certain clinical assets. On the macro level, amid increasing market polarization, liquidity has continued to flow into AI-related themes, driving strong outperformance in those sectors, while other sectors have experienced notable valuation compression. Meanwhile, overseas BD deals for China’s innovative drugs are facing heightened policy uncertainty. John Moolenaar, the Chairman of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, proposed including biotechnology-related technologies in the COINS Act to restrict cross-border intellectual property licensing. He specifically noted that multinational pharmaceutical companies, including Bristol Myers Squibb, have recently stepped up out-licensing and co-development partnerships with Chinese companies. The broker believed that recent macro disturbances and sector volatility provide a good opportunity for long-term investors to accumulate leading high-quality Chinese biopharmaceutical companies at lower levels. Its top picks were INNOVENT BIO (01801.HK), HANSOH PHARMA (03692.HK) and KEYMED BIO-B (02162.HK). It was also watchful of AKESO (09926.HK) and HENGRUI PHARMA (01276.HK), which are not yet under its coverage. Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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