Is this a good buying opportunity? Or should we wait and see? The pork concept is strengthening, Huabao Fund's Agriculture, Animal Husbandry, and Fishery ETF (159275) rose by 2.83%! The Hong Kong Stock Connect Innovative Medicine ETF continues to climb.

Or due to Trump’s speech “stirring” the market, the stock market came under pressure across the board. On Thursday (April 2), the main indices of the A-shares all drifted into the red, with the ChiNext Index opening lower and falling more than 2%. Over 4,300 stocks in the market declined, with a total turnover of 1.86 trillion yuan in Shanghai, Shenzhen, and Beijing markets, shrinking by 167.1 billion yuan compared to yesterday.

Since March, sudden geopolitical risks in the Middle East have intensified, pessimistic narratives have increased trading, and market funds have shifted to low-volatility assets for safe haven. The banking sector repeatedly showed counter-market performance. The Huabao (512800) billion-yuan bank ETF closed up 0.37% intraday, rising step by step, approaching the half-year moving average. The pork concept stocks remained active against the trend, as capacity reduction entered a critical window. The national frozen pork reserve and storage measures were launched, with the market’s first *Agriculture, Forestry, Animal Husbandry, and Fishery ETF Huabao (159275) intraday up to 2.83%, closing with a strong increase of 1.47%.

The pharmaceutical sector showed resilience with a rare red, with leading innovative drug company San Sheng Guo Jian soaring over 13% to hit a new high, and the Huabao (562050) drug ETF intraday once rising over 1.2%, closing above the half-year line! Currently, innovative drugs may be in a “performance realization, overseas expansion acceleration, and conference catalysis” triple cycle superimposed golden window period. The Hong Kong Stock Connect Innovation Drug ETF Huabao (520880), a 100% innovative drug R&D target, continued to rise after yesterday’s record-breaking 6.99% increase, the largest single-day gain since listing, and rose again today.

The Hong Kong Stock Connect auto stocks also performed well, with Leapmotor, Geely, and others experiencing strong sales and performance. The Hong Kong Stock Connect Auto ETF Huabao (520780), focused on new energy vehicles, opened sharply higher by over 2%, approaching previous highs.

When can the market expect a trend rally? Industrial Securities suggests paying attention to five signals: ① clearer regulatory signals against internal competition; ② whether the new generation hybrid model and DeepSeek large models released in April can boost confidence in Chinese tech; ③ whether the data from the peak economic activity season in March-April can again exceed expectations; ④ when the Hong Kong Stock Connect ETF turns into net inflow; ⑤ progress in US-Iran negotiations.*

In terms of allocation, CICC recommends that with a light position, investors can focus on assets with already full or well-priced valuations, such as Hong Kong tech, gold, and innovative drugs; with a heavier position, consider reducing holdings or hedging with low-volatility dividend assets like banks and utilities. Additionally, if high oil prices continue to push up fertilizer and grain prices, agricultural products can be gradually watched; sectors benefiting from energy storage and coal can be held, but due to consensus and crowded trading, avoid over chasing high.*

【ETF Full Knowledge Hot Review】Focus on the trading and fundamentals of industry theme ETFs such as banking, pharmaceuticals, and Hong Kong Stock Connect auto stocks.

1. 【State-owned major banks serve as the “ballast” of the market, Agricultural Bank up over 3%! The Huabao (512800) billion bank ETF rises step by step, exceeding 10% in March】

The banking sector was red all day against the trend. The Huabao (512800) billion bank ETF intraday rose as much as 0.75%, closing up 0.37%, rising step by step, approaching the half-year moving average.

The performance of the six major state-owned banks in 2025 has been fully revealed. Amid industry-wide net interest margin compression, these banks achieved positive growth in asset size, operating income, and net profit attributable to shareholders. The total net profit attributable to shareholders for the year reached 1.42 trillion yuan, with cash dividends exceeding 420 billion yuan, maintaining a stable dividend payout ratio of 30% and a dividend yield of about 4%, serving as core weight stocks and market stabilizers in A-shares.

Today, the state-owned banks continued their strong performance, with Agricultural Bank leading up over 3%. China Construction Bank, Postal Savings Bank, Bank of China, and Bank of Communications rose over 1%, with ICBC also gaining. Additionally, Yunnan Rural Commercial Bank, Huaxia Bank, and Shanghai Rural Commercial Bank saw notable gains.

Geopolitical conflicts increased volatility in equity markets and triggered risk-averse sentiment. In this context, high-dividend, low-valuation, and low-volatility defensive sectors demonstrated their allocation value. In March, the CSI Bank Index rose 3.83%, ranking first among all CSI secondary industry indices, while the SSE Composite Index, ChiNext Index, and Shenzhen Component Index declined 6.51%, 3.79%, and 7.02%, respectively. The bank sector outperformed the Shanghai Composite by 10.34%.

Note: The five-year cumulative returns of the CSI Bank Index are: 2025, 6.79%; 2024, 34.71%; 2023, -7.27%; 2022, -8.78%; 2021, -4.41%. The index’s constituent stocks are adjusted periodically according to the index rules. Past performance does not predict future results.

Currently, Yangtze Securities states that in an environment of systemic reduction in market risk appetite, the defensive value of the banking sector, which has been adjusted for three quarters, is prominent. The sector is near relative lows seen in early October last year and late January this year, with margin of safety, low PB-ROE valuation, improving earnings trends, and gradually digesting capital flows from index funds.

Galaxy Securities believes that rising short-term risk aversion benefits bank sector allocation. Future recovery is expected to come more from fundamental improvement, with performance elasticity in 2026 likely to further release. Under low interest rates and accelerated long-term capital entry, the high dividend, low valuation attributes of banks remain attractive to long-term institutional investors.

The Bank ETF (512800) and its linked funds (A: 240019; C: 006697) passively track the CSI Bank Index, which includes 42 listed banks in A-shares, making it an efficient tool for tracking the overall bank sector. The ETF’s latest size is nearly 12 billion yuan, with an average daily trading volume over 800 million yuan since 2025, making it the largest and most liquid among the 10 bank ETFs in A-shares!

2. 【Performance + Overseas Expansion, Two Core Supports! Innovative drugs active against the trend, 520880 continues to rise, pharma ETF above the half-year line! Future market space for innovative drugs exceeds 2 trillion yuan】

Geopolitical complexities and increased volatility in the AH market persist. The hot trend of innovative drugs, which surged yesterday, remains high, with several stocks rising against the trend!

The Hong Kong Stock Connect innovative drug stocks are highly elastic and volatile. Stocks like Weili Zhibo-B, Yingxi Intelligent, BaiAo SaiTu-B, etc., with over 10% fluctuation, and the Hong Kong Stock Connect Innovation Drug ETF Huabao (520880), a 100% R&D target, touched a high of 2.5% in early trading and ultimately closed up 0.19%, holding above the half-year line. Yesterday, 520880 surged nearly 7%, setting a new historical single-day increase.

The A-share pharmaceutical sector saw mixed performance. Leading innovative drug company San Sheng Guo Jian soared 13% to a new high! Traditional Chinese medicine leader Yunnan Baiyao and Jichuan Pharmaceutical also contributed. The sole representative of the pharmaceutical sector, the drug ETF Huabao (562050), rose 0.58% against the trend, continuing its upward trend, closing above the half-year line.

News-wise, San Sheng Guo Jian’s 2025 performance far exceeded expectations! Operating revenue reached 4.2 billion yuan, up 252.63% year-over-year; net profit attributable to shareholders was 2.9 billion yuan, up 311.5%; non-recurring net profit was 2.77 billion yuan, a 1025% surge.

Recently, innovative drugs have repeatedly led the market, with related ETFs like 520880 hitting record daily gains. Despite market deep correction, innovative drugs show resilience and outperform, possibly supported by two core factors:

Fundamentals: In 2025, companies like Innovent, Rongchang Biotech, BeiGene, Novocure, Lepu, Sihuan, CanSino, etc., are collectively turning profitable, indicating an industry cycle of profit recovery. As these companies strengthen their own cash flow, valuation impacts from rate cut expectations will weaken significantly.

Overseas expansion: In Q1 2026, China’s innovative drug licensing (BD) transactions reached 53, with upfront payments exceeding $3.3 billion and total deals surpassing $60 billion, nearly half of 2025’s annual total.

According to estimates by YaoYao Pharma and Dongwu Securities, China’s innovative drug market (including hospital sales, outside hospital sales, BD milestones, and revenue sharing) is expected to exceed 2 trillion yuan by 2030, with a CAGR of 24.1%.

Additionally, the innovative drug sector shows relative immunity to geopolitical conflicts, offering high cost-effectiveness in the current uncertain environment. To catch the rebound of innovative drugs, two major tools are recommended:

Invest in innovative drugs via the Hong Kong Stock Connect Innovation Drug ETF Huabao (520880), which fully invests in R&D companies, with over 70% of top ten holdings being leading innovators, underlying assets in Hong Kong stocks, high elasticity, and T+0 trading.

To reduce volatility, choose the drug ETF Huabao (562050), with an exclusive allocation of “70% innovative drugs + 30% traditional Chinese medicine,” a rare market product combining high-growth innovative drugs and high-dividend Chinese medicine, offering upside potential and resilience.

3. 【Late surge! Chery Auto soars over 15% on massive volume! Multiple positive signals for new energy vehicles, Hong Kong Stock Connect Auto ETF Huabao (520780) defies the trend!】

Hong Kong new energy vehicle stocks surged against the trend. At the close, Chery Auto jumped over 15% in the last trading session with a volume of 770 million yuan, Geely rose over 8%, and Great Wall Motor gained over 5%.

Regarding popular ETFs, the Hong Kong Stock Connect Auto ETF Huabao (520780), focused on new energy vehicles, closed up 0.88% for the day. Notably, due to trading time differences, its underlying index rose 1.48% today, and the ETF is expected to catch up after tomorrow’s market open.

Market-wide, the active performance of Hong Kong Stock Connect auto stocks may be driven by multiple factors:

1. Sales: Several automakers announced March delivery figures, generally showing significant growth. Chery’s five brands’ total sales increased about 15% YoY; Leapmotor returned to 50k monthly sales, ranking top among new entrants, up 35% YoY and 78.25% MoM. Li Auto and Xpeng also saw growth compared to last month.

2. Earnings: Traditional automakers and new entrants both show strong earnings improvement. Among those releasing 2025 annual reports, Geely and Chery each reported over 300 billion yuan in revenue, driven by new energy vehicles and overseas markets. New entrants like Leap achieved full-year profitability in 2025, with NIO and Xpeng profitable in Q4.

3. Macro drivers: High oil prices boost EV demand expectations. Elevated fuel costs push consumers toward EVs, with inquiries increasing by 15–36% in US and European markets. Analysts believe this will boost pure electric vehicle demand in the medium term, possibly reversing some slowdown trends among European and American automakers.

Looking ahead, CITIC Construction Investment states that at this point, the domestic passenger vehicle demand outlook and sector valuation may have bottomed. Structural alpha favors exports exceeding expectations and high-end new energy vehicles accelerating volume. Valuation space is promising for physical AI-driven growth. The export cycle for new energy vehicles begins a new strong growth phase in late 2025, with sustained supply-demand driven by high oil prices, likely outperforming expectations in 2026.

For portfolio allocation, focus on the T+0 active trading Hong Kong Stock Connect Auto ETF Huabao (520780), which tracks the whole vehicle sector and also covers auto parts, industrial metals, and other sub-sectors. Benefiting from high auto consumption, accelerated L3-L4 intelligent driving deployment, and spillover benefits from robotics, it holds leading Hong Kong stocks like XPeng, BYD, Li Auto, and Geely.

Note 1: Fees are detailed in each fund’s legal documents.

Note 2: The first-ever agricultural, forestry, animal husbandry, and fishery ETF (159275) tracks the CSI Agriculture, Forestry, Animal Husbandry, and Fishery Index.

Source: Shanghai and Shenzhen Stock Exchanges, as of 2026.4.2. Reminder: Recent market volatility may be significant; short-term gains or losses do not predict future performance. Investors should invest rationally based on their own financial situation and risk tolerance, paying close attention to position sizing and risk management.

*Institutional views referenced from: ①Industrial Securities’ March 26 report “Can Hong Kong stocks continue to rebound?”; ②CICC’s March 29 report “Has the market bottomed out?”; ③Yangtze Securities’ March 30 report “2025 Annual Report: Large Banks’ Net Interest Margins Stabilize”; ④Galaxy Securities’ March 29 report “US-Iran Conflict’s Impact on Sectors is Controllable, Risk Aversion Rises”; ⑤CITIC Construction Investment’s March 31 report “Passenger Vehicle Industry Cycle, Structural Alpha, and Investment Review.”

Risk warning: The Huabao (159275) ETF passively tracks the CSI All Share Agriculture, Forestry, Animal Husbandry, and Fishery Index, based on its base date of 2004.12.31, published on 2016.12.12; the Huabao (512800) bank ETF tracks the CSI Bank Index, based on 2004.12.31, published on 2013.7.15; the Huabao (562050) pharma ETF tracks the CSI Pharmaceutical Index, based on 2011.12.30, published on 2013.7.15; the Hong Kong Stock Connect Innovation Drug ETF tracks the Hang Seng Hong Kong Stock Connect Innovation Drug Select Index, based on 2020.12.31, published on 2023.7.17; the Hong Kong Stock Connect Auto ETF Huabao tracks the CSI Hong Kong Stock Connect Auto Industry Theme Index, based on 2016.12.30, published on 2022.07.21. The index components are adjusted periodically according to the index rules. Past backtested performance does not predict future results. The stocks mentioned are for objective illustration only and do not constitute recommendations or investment advice. All information (including but not limited to stocks, comments, forecasts, charts, indicators, theories, or any form of expression) is for reference only. Investors are responsible for their own investment decisions. The views, analysis, and forecasts in this article do not constitute investment advice. Huabao Funds are not responsible for any direct or indirect losses caused by using this content. Investors should carefully read the fund’s legal documents, such as the Fund Contract, Prospectus, and Key Information Document, to understand the fund’s risk-return profile and choose products suitable for their risk tolerance. Past performance does not guarantee future results. The fund managers’ assessments indicate that the risk levels of the Huabao (159275) Agriculture, Forestry, Animal Husbandry, and Fishery ETF, Huabao (512800) Bank ETF, and Huabao (562050) Pharma ETF are R3 – medium risk, suitable for balanced (C3) and above investors; the Hong Kong Stock Connect Innovation Drug ETF and Auto ETF Huabao are R4 – medium-high risk, suitable for active (C4) and above investors. Suitability opinions are subject to the sales institutions’ judgment. The risk ratings assigned by sales institutions may differ from those of the fund managers, but must not be lower than the fund managers’ ratings. The risk-return characteristics and risk levels may differ due to different assessment factors. Investors should understand the risk-return profile, consider their investment goals, horizon, experience, and risk capacity, and bear the risks themselves. The China Securities Regulatory Commission’s registration of the funds does not imply any judgment or guarantee of their investment value, market prospects, or returns. Investment involves risks.