Hang Seng Index Surges 1,732 Points in Q3 as Pharma, Biotech Stocks Lead Rally
On.cc · 1 SOURCESabout 3 hours ago3 MIN
Summary
Hong Kong's Hang Seng Index posted a robust gain of 1,732 points in the third quarter of 2026, with pharmaceutical and biotech companies leading the rally and significantly outperforming the broader market. The Science and Technology Innovation Board Index, however, continued its downward trajectory, falling for a fourth consecutive quarter despite the overall market strength. Japanese investment bank Nomura attributes the pharmaceutical sector's strong performance to the increasing attractiveness of Chinese innovative drug pipelines among overseas buyers, with major multinational pharmaceutical companies accelerating their acquisitions of Chinese biotech assets.
Key Points
- The Hang Seng Index climbed 1,732 points during Q3 2026, while the Science and Technology Innovation Board Index declined 218 points or 4.88% for the quarter, marking its fourth consecutive quarterly loss
- September alone saw the tech index plunge 365 points or 7%, deepening concerns about the sector's outlook amid global liquidity tightening
- Japanese investment bank Nomura highlighted that Chinese drug pipelines are gaining international attention due to their novelty and potential superior therapeutic effects, driving pharmaceutical stocks higher
- Merck (MSD) recently secured exclusive licensing rights from Shanghai Sipuli Medicine for a record 21.3 billion US dollars, exemplifying the accelerating pace of Chinese innovative drug acquisitions by multinational pharma companies
- Market turnover on Wednesday exceeded 1.871 trillion yuan, with northbound capital recording a net inflow of 68 billion yuan; for the full quarter, northbound water net inflow to Hong Kong stocks totaled 1.34 trillion yuan
- CLSA reported foreign capital withdrew 85 billion yuan from Hong Kong stocks last week, concentrated in information technology, raw materials, and financial sectors, while southbound capital has accumulated 4.317 trillion yuan RMB year-to-date
- A-share tech margin trading activity as a percentage of total turnover fell from 10.1% in late June to 8.5%, a yearly low, though it rebounded to 9.2% in recent weeks, indicating renewed leverage appetite
Why It Matters
The divergence between pharmaceutical stocks surging while the tech index extends its losing streak underscores how sector-specific factors are driving Hong Kong market performance more than broad macroeconomic indicators. The record-breaking Merck deal signals that China's innovative pharmaceutical sector is becoming a significant global M&A target, potentially reshaping Hong Kong's equity market composition and attracting new categories of institutional investors to the territory's exchanges .
The divergence between pharmaceutical stocks surging while the tech index extends its losing streak underscores how sector-specific factors are driving Hong Kong market performance more than broad macroeconomic indicators. The record-breaking Merck deal signals that China's innovative pharmaceutical sector is becoming a significant global M&A target, potentially reshaping Hong Kong's equity market composition and attracting new categories of institutional investors to the territory's exchanges .