Biotech exchange-traded funds (ETF) in Hong Kong are attracting local and global investors as Chinese pharmaceutical makers reap the dividends of research and development and narrow the gap with the US, according to China Asset Management (Hong Kong) (China AMC).
With Hong Kong-traded Chinese stocks already enjoying a decent rally, investors were now looking for unique opportunities to beat the market, said Heidi Cai, head of international business at the asset manager.
“Funds from the US are flowing into biotech names and tech names,” she said at a panel organised by the Hong Kong Investment Funds Association on Monday. “The main catalyst for the biotech rally this year is out-licensing deals.”
Chinese biotechs’ licensing agreements so far this year have reportedly reached more than US$60 billion, with global pharmaceutical giants paying hefty fees to license new drug candidates developed by mainland companies.
The mainland companies’ business model was to leverage China’s large, low-cost biotech sector to develop drugs and then sell or license them to US companies, Cai said.
Strong interest in sectors like artificial intelligence and biotech has spurred Chinese investors to pour a record amount of money into Hong Kong-listed ETFs.