Healthcare stocks rallied during the morning session on July 27, attracting significant capital inflows. As of the time of writing, net purchases of the pharmaceutical and biomedical sector exceeded 71 billion yuan, ranking second among the 31 Shenwan primary industries, trailing only electronics.

The medical sector opened lower but trended higher, with the Healthcare ETF (512170), the largest of its kind by market size, surging up to 3% intraday. Constituent stocks showed strong performance, with JOINN Lab hitting its daily limit, Sanbo Hospital Management Group Limited (301293) rising over 14%, and Mayo Healthcare and Andon Health gaining more than 6%.

On the news front, US-based startup Science Corp. received approval to market a retinal chip in the European Union that can help patients with "geographic atrophy" restore partial vision. This marks the first time a US brain-computer interface (BCI) company has scaled such a device to the patient market.

The pharmaceutical sector also warmed up in tandem. Tonghua Golden-Horse Pharmaceutical led with a 6% gain, while Betta Pharmaceuticals and Hybio Pharmaceutical advanced over 4%. The Pharma ETF (562050), the only exchange-traded fund tracking the pharmaceutical index nationwide, rose 2.62%, reclaiming its 250-day moving average.

Multiple policy tailwinds have emerged for the healthcare sector since July:

On July 13, the State Council officially released the "Fifteenth Five-Year Plan for National Health," which for the first time explicitly proposes "full-chain support for the development and application of innovative drugs and medical devices."

On July 10, the State Council approved in principle the "Fifteenth Five-Year Plan for the Revitalization of Traditional Chinese Medicine." The plan emphasizes equal emphasis on traditional Chinese and Western medicine, and calls for accelerating the modernization of TCM to promote its global reach.

On July 9, the "National Essential Drugs List (2026 Edition)" was officially published after an eight-year hiatus. The new edition expands the total variety count to 794, with 16 innovative drugs making the list for the first time on a large scale, accounting for over 5% of the total.

From a capital flow perspective, the low-valued healthcare sector may become a preferred destination during periods of tech stock volatility. Zhang Fang, fund manager for the Healthcare ETF (512170) and Pharma ETF (562050), noted that after an extended and significant decline, the overall valuation of the healthcare sector is at historically low levels, offering high investment value. This makes it more likely to attract capital attention during market style rebalancing.

To seize the opportunity in the healthcare rebound, two key investment tools are worth watching:

The Healthcare ETF (512170): The largest medical and healthcare ETF by market size, focusing on medical devices (including brain-computer interfaces) and medical services (with CXO content nearing 30%), also incorporating AI medical concepts. Its over-the-counter feeder fund code is 012323.

The Pharma ETF (562050): The only ETF nationwide tracking the pharmaceutical index, featuring a unique "72% innovative drugs + 22% traditional Chinese medicine" allocation, combining the high growth of innovative drugs with the high dividends of TCM. Its OTC feeder fund code is 024986.

Data sourced from the Shanghai and Shenzhen stock exchanges, the CSI Index Company, and others.

Note: The ETFs mentioned in the text do not charge sales service fees. Fund rates are detailed in each fund's legal documents.

Risk Warning: The index constituent stocks shown are for demonstration purposes only. Descriptions of individual stocks do not constitute investment advice of any kind, nor do they represent the holdings or trading intentions of any fund managed by the manager. The composition of the underlying index constituents is adjusted in a timely manner according to the index compilation rules. Historical annual returns/volatility for the CSI Medical Index from 2021 to 2025 were: -14.71%/34.42%, -25.10%/29.45%, -24.25%/18.63%, -17.16%/36.02%, 3.08%/19.73%; for the CSI Pharmaceutical Index from 2021 to 2025: -9.10%/23.43%, -21.09%/25.92%, -3.70%/18.25%, -6.53%/29.46%, 9.38%/16.12%. The composition of index constituents is adjusted in a timely manner according to the index compilation rules. Past performance does not predict future results. The fund manager has assessed the risk rating of the Medical ETF feeder fund as R4 (Medium-High Risk), suitable for aggressive (C4) investors and above. The risk ratings for the Medical ETF and Pharma ETF are R3 (Medium Risk), suitable for balanced (C3) investors and above. Any information appearing in this text (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, or any form of expression) is for reference only. Investors must be responsible for their own independent investment decisions. Furthermore, any views, analyses, or forecasts in this text do not constitute investment advice of any kind to the reader, nor shall the author be liable for any direct or indirect losses arising from the use of this content. Fund investment involves risk. Past performance of a fund does not represent its future performance. The performance of other funds managed by the fund manager does not constitute a guarantee of a fund's performance. Fund investment requires caution.