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China News Service, July 17 (Xue Yufei) On the 16th, several fund companies announced that their QDII products had a large premium, reminding investors to pay attention to the premium risk. Since the beginning of this year, QDII funds have seen a wave of rising momentum, and product purchase restrictions, risk warnings, temporary suspensions, etc. have repeatedly occurred.

However, not all QDII products have achieved good returns. As of July 16, the year-to-date returns of 12 QDII funds were still below -20%. Currently, the year-to-date performance of QDII products in the entire market varies by more than 60 percentage points.

　　41 QDII products achieved annual returns exceeding 20%

According to Wind data,As of July 16, there were 41 QDII products in the entire market (Note: different shares of the same product are only counted once) with a return rate of more than 20% since 2024.Among them, Invesco Great Wall Nasdaq Technology Market Value Weighted ETF, Jianxin Emerging Markets Select, Tianhong Global High-end Manufacturing, Invesco Great Wall Nasdaq Technology Market Value Weighted Connection, and E Fund S&P Information Technology Index are in the leading position in terms of returns, with annual returns of 38.25%, 36.89%, 32.83%, 32.27%, and 30.08%, respectively.

Most of these funds are greatly affected by the US stock market, especially the artificial intelligence and semiconductor sectors in the US stock market. According to the first quarter report of 2024 of the Invesco Great Wall Nasdaq Technology Market Value Weighted ETF, the funds invested in stocks and depositary receipts in the US securities market accounted for about 97.28% of the fund's net asset value. The top ten holdings are Nvidia, Microsoft, Apple, Meta, Google, Broadcom, Google, AMD, Adobe, and Qualcomm.

The same is true for China Construction Bank Emerging Markets Select. As of the end of the first quarter of this year, the fund's funds invested in stocks and depositary receipts in the U.S. securities market accounted for approximately 59.47% of the fund's net asset value. The top ten holdings at the end of the first quarter were SK Hynix, Nvidia, TSMC (U.S. stocks), ASML, Qualcomm, MediaTek, Applied Materials, ASE, Onto, and ARM.

E Fund Asia Select, managed by fund manager Zhang Kun, has also reversed the poor performance of several consecutive years. As of July 16, the annual return rate was about 19.78%. Different from the aforementioned funds, Zhang Kun maintained a relatively high allocation ratio for Hong Kong stocks. As of the end of the first quarter, the allocation ratios of Hong Kong stocks and US stocks were about 59.97% and 34.53%, respectively, with little change in the allocation ratio.

From the list of heavily-weighted stocks, Zhang Kun reduced his allocation to technology stocks in Hong Kong stocks and increased his allocation to non-essential consumer goods, such as the luxury brand Prada; in U.S. stocks, he focused on semiconductor targets. At the end of the first quarter, three semiconductor stocks, TSMC, ASML, and AMD, were among the top ten heavily-weighted stocks.

　　Funds with heavy holdings in pharmaceutical stocks have poor returns

Among the numerous QDII products, some funds also performed poorly. According to Wind data, as of July 16, a total of 75 QDII funds in the market had negative returns for the year, of which 21 products had returns between -10% and -30%.

　　ETF funds that focus on investing in the pharmaceutical sector of the Hong Kong stock market have the worst returns. Currently, QDII products with an annual yield of less than -20% are basically such funds.As of July 16, the annualized returns of Bosera Hang Seng Healthcare ETF, Southern Hang Seng Hong Kong Listed Biotech ETF, Huaxia Hang Seng Hong Kong Listed Biotech ETF, Hua Xia Hang Seng Hong Kong Listed Biotech ETF, and Harvest Hang Seng Healthcare Connection were approximately -26.68%, -26.28%, -26.17%, -26%, and -25.53%, respectively.

Among the above five index funds, Bosera Hang Seng Healthcare ETF and Harvest Hang Seng Healthcare Connect track the Hang Seng Healthcare Index, while the remaining three funds track the Hang Seng Hong Kong Listed Biotech Index. As of July 16, the Hang Seng Healthcare Index and the Hang Seng Hong Kong Listed Biotech Index have fallen by 27.77% and 27.58% respectively this year.

Some active equity-based public funds with heavy holdings in the pharmaceutical sector also had poor returns.Since Tan Donghan took over as manager of ICBC Credit Suisse New Economy RMB Fund in January 2022, the fund's investment areas have shifted from Internet new economy, medicine, new energy vehicles and other sectors to medicine. According to the fund's classification of industries, the proportion of funds invested in the "health care" industry has been 70% or more in the past two years, and it has dropped to 61.72% by the end of the first quarter of 2024. So far this year, the yield of this product is about -18.39%.

The same is true for Morgan China Biopharmaceuticals, China Universal Hong Kong Advantage Select, and E Fund Global Pharmaceutical Industry RMB, all of which are heavily invested in pharmaceutical stocks. As of July 16, their annual returns were approximately -16.74%, -16.62%, and -16.29%, respectively. A review of the holdings of these active equity funds revealed that some of their heavily invested stocks overlapped. For example, Kelun Biotech-B was among the top ten heavily invested stocks of the above four funds, and Innovent Biologics was on the list of heavily invested stocks of three of the funds.

　　How will pharmaceutical stocks perform in the future?

Not only Hong Kong stocks, the share prices of pharmaceutical companies listed on the A-share market have also seen some adjustments. Since the beginning of this year, the CSI Shenwan Pharmaceutical and Biological Index has fallen by about 20%. The adjustment of the share prices of the pharmaceutical sector has put pressure on the performance of public funds with pharmaceutical themes.

In the first quarter report of this year, Yang Zhenxiao, the manager of E Fund's global pharmaceutical industry RMB fund, said that he would work hard to return the trust of investors. Yang Zhenxiao also said that he continued to be optimistic about the performance of China's pharmaceutical industry, especially innovative pharmaceutical companies. Overall, he continued to be optimistic about the direction of serious medical care. The specific logic is not much different from the end of last year. Although the stock prices of many companies have performed generally since the beginning of the year, the prices in the secondary market will eventually gradually reflect the positive changes at the industry level.

Guosen Securities believes that the continued decline in the pharmaceutical industry and the continued decline in attention have accelerated the bottoming out and rebound expectations of the sector. It is expected that after the disclosure of the interim report, the negative factors in the pharmaceutical industry will be fully reflected, and investors' expectations for the growth of the whole year and next year will be relatively clear, which will be a good time for layout. From the perspective of industry fundamentals, pharmaceutical listed companies as a whole have experienced negative growth for three consecutive quarters and will show healthier growth in the future. Huafu Securities said that by reviewing the "darkest moment" of the pharmaceutical industry in history, the pharmaceutical industry has reached a clear bottom. Considering the current configuration and valuation, it may be the market bottom at present.

He Juying, head of the pharmaceutical and health research group of CITIC Securities, said in a recent research report that it is recommended to maintain confidence in the pharmaceutical sector in the second half of the year and wait for the opportunity. She believes that the performance of prescription drugs continues to climb, "innovation + access" drives growth, and catalysis is intensive in 2024. She is optimistic about high-quality companies that combine innovative drugs and imitations; the medical device sector is optimistic about the gradual recovery of growth in the second half of the year; the traditional Chinese medicine sector is expected to improve its growth rate in the second half of the year, and is optimistic about industry leaders; optimistic about high-quality targets for state-owned enterprise reform; structural opportunities in the raw material pharmaceutical industry; and optimistic about leading innovative drug and medical device companies in the overseas market.

(For more reporting clues, please contact the author Xue Yufei: [email protected]) (China News Service APP)

　　(The views in this article are for reference only and do not constitute investment advice. Investment is risky and you should be cautious when entering the market.)

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Editor: Wei Wei and Li Zhongyuan