China healthcare stocks shine in Hong Kong amid Middle East turmoil

China’s healthcare sector has been drawing offshore capital to Hong Kong-listed stocks as investors look for safe havens amid global volatility in commodities. The Hang Seng Healthcare Index, tracking some of China’s most innovative pharmaceutical companies including Akeso and Innovent Biologics, has surged about 13 per cent since March 23, outpacing the benchmark Hang Seng Index’s about 6 per cent gain over the same period. “Although the Middle East conflict has created a lot of uncertainty and volatility in the overall market, we have seen investor interest in China healthcare start to improve in the past two weeks, given that healthcare is generally more insulated from commodity prices than many other industries,” said Yang Huang, head of China healthcare research at JPMorgan Chase. The healthcare stock rally comes as commodity markets have whipsawed since late February when the US and Israel launched air strikes on Iran, resulting in the closing of the Strait of Hormuz, the waterway through which one-fifth of global oil and liquefied natural gas passes. Brent crude jumped to a peak of US$121.88 per barrel in March before retreating to US$98.66 on Thursday, while West Texas Intermediate traded at US$97.40 a barrel. The healthcare sector’s improving fundamentals were also providing a tailwind, according to analysts. China’s biotech subsector posted revenue and net profit growth of 36 per cent and 103 per cent, respectively, in 2025, driven by commercialisation and licensing deals, Huang said. “The healthcare sector shows resilient performance versus the broader Hong Kong market, contributed by stronger-than-expected earnings from large-cap pharmaceutical firms,” said Jonah Chen, head of healthcare research at China Merchants Securities (Hong Kong). Innovative cancer drug makers Hansoh Pharmaceutical and Innovent were leading the sector’s outperformance after strong earnings releases, Chen added. Among constituents of the Hang Seng Healthcare Index, Hansoh has surged 26 per cent since March 23 to HK$38.70 on Friday, while Akeso has jumped about 23 per cent to HK$138. Innovent advanced about 14 per cent to HK$88.20 over the span. A slew of Chinese biopharmaceutical and biotech companies posted their first-ever annual profits in 2025 after years of losses caused by heavy investments in research and development. Hong Kong-listed Innovent posted a net profit of 814 million yuan (US$119 million) in 2025, reversing a net loss of 94.6 million yuan in 2024, driven by the sales of 18 approved products, including the cancer therapy sintilimab and weight-loss drug mazdutide. Shenzhen-based XtalPi Holdings recorded a net profit of 134.6 million yuan last year, swinging from a net loss of 1.51 billion yuan in 2024, driven by a 419 per cent surge in revenue from its artificial intelligence-powered drug discovery business. Another notable case is Yantai-based Rongchang Biopharmaceutical, a developer of antibody-drug conjugates and biologics for cancer and autoimmune diseases, which swung from a net loss of 1.47 billion yuan in 2024 to a net profit of 710 million yuan in 2025. Rongchang licensed its autoimmune drug telitacicept to US-listed Vor Biopharma and an eye drug to Japan’s Santen Pharmaceutical, contributing to a record US$135.7 billion in out-licensing deals by Chinese drug makers last year.