HKEX Report丨CES HK Biotechnology Index

北大汇丰金融研究院 2021-01-21

Editor's Note

Major global stock markets have in recent years developed new listing rules specifically for the biotechnology (biotech) sector to facilitate effective allocation of venture capitals and private equity funds, completing the “input-output” cycle ofcapital deployment and optimise resources allocation.

In the Asian market, the CES HK Biotechnology Index tracks biotech companieslisted according to Hong Kong’s new listing rules. The use of biotechnology by index constituent stocks in the rapies for human illnesses represents the future development direction of biotechnology in Asia. This is of high significance for China to strengthen its competitiveness in biomedical innovation.

Author: Chief China Economist's Office, Hong Kong Exchanges and Clearing Limited

REPORT SUMMARY

Global economic development, population growth and an aging society have given new impetus to the biomedical industry. Compared to traditional sectors, biomedical companies are characterized by having substantial investment, high-value outputs and high risks, and being technology intensive. They usually adopt equity financing rather than debt financing as an important source of financing during their growth period. Financing by different methods at different stages of development of a biomedical company according to development characteristics provide strong financial support for the sector’s development. Major global stock markets have in recent years developed new listing rules specifically for the biotechnology (biotech) sector to facilitate effective allocation of venture capitals and private equity funds, completing the “input-output” cycle ofcapital deployment and optimise resources allocation.

The Mainland’s biomedical industry thrives largely because of policy support, increasing capital inputs, accelerating industry consolidation and other favourable factors. In April 2018, HKEX amended its Listing Rules and opened up a new listing channel for pre-revenue or pre-profit biotech companies in Asia, creating a sound environment for the financing of, and investment in, this dynamic and promising sector.

Relevant indices and financial products have been rolled out across major global capital markets to broaden investor access to the biomedical sector. The mostrepresentative ones are the NASDAQ Biotechnology Index and the S&P Biotechnology Select Industry Index, and a series of exchange traded funds (ETFs) based on theseindices. In the Asian market, the CES HK Biotechnology Index (“CES HK Biotech” for short) tracks biotech companieslisted according to Hong Kong’s new listing rules and Hong Kong-listed biomedical companies which are in relatively mature development stage. The index gives a comprehensive picture of the performance of Hong Kong’s biomedical sector and serves as an industry investment benchmark.

The launch of CES HK Biotech will further increase the diversity of the Hong Kong capital market. The use of biotechnology by index constituent stocks in the rapies for human illnesses represents the future development direction of biotechnology in Asia. This is of high significance for China to strengthen its competitiveness in biomedical innovation.

FULL REPORT

（Please click to enlarge pictures）

For the PDF version, please click "Read More"

(Please wait for the downloading)