The logic behind the surge in mRNA and biotech: The market is buying into the entire sector.

On August 19,Moderna and Merck & Co announced that their personalized mRNA cancer vaccine, combined with Keytruda, met its endpoints in the interim analysis of the Phase III melanoma trial.This isthe first personalized mRNA cancer vaccine globally to demonstrate efficacy in late-stage trials,and marks the market's first repricing of this technology based on large-scale clinical results since the pandemic.

This vaccine is not for preventing infection but serves as adjuvant therapy post-surgery. Patients undergo tumor resection first, followed by the customization of an mRNA vaccine based on tumor mutations to train the immune system to identify residual cancer cells, used in combination with existing immunotherapies. The company stated that, compared to Keytruda monotherapy, it significantly extended recurrence-free and distant metastasis-free survival, with no new safety concerns identified. Detailed figures will be released later; currently, the more complete reference remains the earlier five-year follow-up from the Phase II trial: a 49% reduction in the risk of recurrence or death, and a 59% reduction in the risk of distant metastasis or death.

(Image above generated by AI)

Following the announcement, Bloomberg data shows that Moderna surged 177% on August 19, $Merck & Co (MRK.US)$ while Merck & Co rose 13%. Among peers,$BioNTech (BNTX.US)$ shares jumped 22%, best reflecting the sector's revaluation; stocks related to sequencing and mRNA raw materials $Twist Bioscience (TWST.US)$ 、 $Maravai LifeSciences (MRVI.US)$ 、 $Tempus AI (TEM.US)$ also gained over 20%.The Nasdaq Biotechnology Index rose approximately 6% that day, marking its largest single-day gain in four and a half years,outperforming the broader market; $NASDAQ 100 Index (.NDX.US)$$Nasdaq Composite Index (.IXIC.US)$ the S&P Healthcare Sector climbed 3.5%, outperforming $S&P 500 Index (.SPX.US)$ the wider index. This indicates that capital is not just chasing the two companies that released data, but is alsorevaluing the entire mRNA cancer therapy value chain, thereby boosting sentiment in the biotech and healthcare sectors.。

What truly changes the investment logic is not the immediate cure for all cancers, but the fact that it has crossed a long-standing threshold.Personalized cancer vaccines have been studied for decades, mostly stalled at small-scale trials. Melanoma is more responsive to immunotherapy, making it the most logical first indication. Only by proving here that "bespoke vaccines combined with existing immunotherapies outperform standard care" can this entire approach qualify as a registrable, commercializable new category.

The sector sentiment is being driven by three main factors. First, relevant companies are no longer valued solely as declining vaccine businesses. Second, the same approach is advancing in lung, bladder, and kidney cancers, with other companies having similar projects; success in melanoma will extend investors' willingness to wait for the next set of data. Third, the investment narrative has shifted from the "vaccine cycle" to the broader oncology market; for Merck & Co, it also relates to how to build new combinations with existing immunotherapies before Keytruda's patent expires.

The logic for investing in the pharmaceutical sector: think long-term and diversify, rather than chasing single news headlines.

Continuous technological advancement in biotech is the core investment thesis for this sector; but equally important, yet often overlooked, is the rigid demand driven by an aging population. Cancer, chronic diseases, and personalized treatments are long-term needs that an aging society cannot avoid. The expansion of mRNA from infectious disease vaccines to cancer treatment demonstrates that the platform can extend across indications, rather than being a one-off pandemic business. Therefore,pharmaceuticals and biotech deserve to be part of a long-term portfolio allocation, rather than existing only on the day data is released.

However,Technological breakthroughs do not eliminate the industry's most fundamental characteristic: extremely high uncertainty.No one can accurately predict when mRNA cancer vaccines will pass Phase III trials. On success, stock prices can double in a day; on failure or disappointing data, drawdowns can be equally severe. Moderna itself is an example—its valuation remained under pressure post-pandemic, but a single clinical milestone can trigger a rapid re-rating. This structure easily induces chase-and-sell behavior: buying into all future indications on good news, and dumping the entire sector when sentiment turns negative.

Therefore, investing in this sector is better suited to a longer time horizon, rather than validating judgments based on single-day gains. A more prudent approachis to diversify across different companies, technological platforms, and indications.，Rather than making a heavy bet on a single drug that has not yet been commercialized,Drug R&D carries high failure rates and long development cycles, with individual stock risks often hinging on the outcome of a single clinical trial. Allocating at the sector level allows for more stable participation in the broader trend of "technological advancement and sustained demand," while mitigating the impact of betting incorrectly on any single clinical result.

August 19 demonstrated that the sector can be re-rated, but this does not change the investment approach: pharmaceuticals are suitable for long-term allocation; diversification is superior to chasing news, and patience is better than trying to predict when the next breakthrough will occur.

Investment opportunities in biotechnology and healthcare

The E Fund (Hong Kong) Solactive Select Biopharma ETF primarily tracksthe Solactive Select Biopharma Index. As of August 20, 2026, $EFund Biophar ETF (03186.HK)$it is the only biopharma-themed ETF listed on the Hong Kong Exchange that allocates to both Hong Kong-listed and US-listed biopharma constituents.。

(As of August 19, 2026, the E Fund Biopharma ETF is the only global ETF that includes biopharma stocks from both the Hong Kong and US markets; the accuracy of this statement may change if other similar products are launched; this statement excludes unlisted funds and private equity funds; data source: Bloomberg)

This ETF offers the following prominent advantages:

– Global Allocation: Coverage of both Hong Kong and US markets

– : Selecting 100 stocks: Focuses on innovative and dynamic biopharmaceutical companies

– diversificationAvoid excessive concentration in a single equity to mitigate idiosyncratic risks in the biopharmaceutical sector (e.g., clinical trials and policy changes).

– Convenient trading: Listed on the Hong Kong stock market with good liquidity, suitable for allocation by various types of investors.

This ETF closely tracks the Solactive Biotechnology Select Index, which covers approximately 100 high-quality biopharmaceutical companies listed in China and the US. The index employs an equal-weight methodology, ensuring balanced allocation among constituents and high diversification, thereby capturing more innovation opportunities within biopharmaceutical enterprises. As of August 19, 2026, the top ten Hong Kong-listed constituents held by the ETF include $KEYMED BIO-B (02162.HK)$ 、 $SKB BIO (06990.HK)$、 $ZAI LAB (09688.HK)$、 $INNOCARE (09969.HK)$、 $BEONE MEDICINES (06160.HK)$、 $INNOVENT BIO (01801.HK)$、 $SIMCERE PHARMA (02096.HK)$、 $JUNSHI BIO (01877.HK)$、 $HANSOH PHARMA (03692.HK)$、 $CSPC PHARMA (01093.HK)$ leading innovative drug companies, as well as names familiar to investors such as $REMEGEN (09995.HK)$ 、 $HUTCHMED (00013.HK)$ 、 $SBP GROUP (01177.HK)$ and $3SBIO (01530.HK)$ . Among the top ten US-listed holdings are the key drivers of the current market rally, $Moderna (MRNA.US)$ 、 $Revolution Medicines (RVMD.US)$ 、 $Alkermes (ALKS.US)$ 、 $TG Therapeutics (TGTX.US)$ 、 $Immunovant (IMVT.US)$ 、 $Protagonist Therapeutics (PTGX.US)$ PTGX, $Halozyme Therapeutics (HALO.US)$ 、 $Kymera Therapeutics (KYMR.US)$ 、 $argenx SE (ARGX.US)$ 、 $Arrowhead Pharmaceuticals (ARWR.US)$ . The balanced allocation of these constituents enables the ETF to capture the broader recovery trend in the pharmaceutical sector.

The greatest advantage of investing in a Biotech ETF isthat even without in-depth knowledge of each company's drug technology and R&D progress, investors can participate in the entire industry through diversified allocation and enjoy the dividends brought by technological advancements.。

The impact brought by the technology sector in Hong Kong stocks

Shifting focus from single US stock news back to Hong Kong tech allocation provides a clearer view of biotechnology's position within technological development. Traditional Hong Kong tech investments often concentrate on internet platforms; however, technological progress has long extended beyond this single track. The recent success of mRNA cancer vaccines once again demonstrates:Healthcare innovation is itself a technological breakthrough, not merely a defensive sector.。

$E Fund HKEX Tech 100 ETF (03456.HK)$ The HKEX Tech 100 Index covers six major areas: artificial intelligence, biotechnology and pharmaceuticals, electric vehicles and smart driving, information technology, the internet, and robotics. Precisely because the index does not bet solely on internet giants, allowing biotechnology and pharmaceuticals to be included in the same basket, this was one of the core reasons why the index outperformed the Hang Seng TECH Index in August. According to Bloomberg data, as of the market close at 12:00 PM on August 20, $HKEX Tech 100 Index (800666.HK)$ it has risen by nearly 3.8% cumulatively since the beginning of August; during the same period, $Hang Seng Index (800000.HK)$and $Hang Seng TECH Index (800700.HK)$ they fell by 0.4% and 1.6%, respectively.

(The above is an objective display of the historical performance of the underlying index. Past index performance does not predict future fund returns and does not constitute any investment advice. Investors are advised to pay attention to the risks associated with index volatility. The actual returns of the fund are affected by management fees, tracking error, and other factors, and may differ from the index performance. Please take note.)

The HKEX Tech 100 incorporates biotechnology and pharmaceuticals into its main technology theme. According to Bloomberg data, as of July 31, 2026, the weight of biotechnology and pharmaceuticals in the index was approximately 18%. For investors who wish to participate in technological development but do not want to bet on just one drug or one platform, this diversification aligns more closely with the conclusion of this article:Technology will advance, and demand will remain, but individual stock R&D is fraught with uncertainty. Sector allocation is a more prudent way to participate.。

Important Notice

The E Fund (Hong Kong) Solactive Biomedical Select Index ETF (the "Sub-Fund") is a sub-fund under the E Fund ETF Trust. The E Fund ETF Trust is an umbrella unit trust established under the laws of Hong Kong. The Sub-Fund is a passively managed ETF as defined under Chapter 8.6 of the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission (the "SFC"). The units of the Sub-Fund (the "Units") are traded on The Stock Exchange of Hong Kong Limited (the "HKEX") like stocks. The investment objective is to provide investment returns that closely track the performance of the Solactive Biomedical Select Index (the "Index") (before fees and expenses).

Since the Sub-Fund's investments are concentrated in securities of biopharmaceutical companies in Hong Kong and the United States, which may be significantly affected by technological changes, increased government regulation, and intense competition from rivals, the Sub-Fund is subject to industry and geographic concentration risks. Therefore, its net asset value may be more volatile than that of broadly diversified funds.

The E Fund (HK) HKEX Tech 100 Index ETF (the "Sub-Fund") is a sub-fund of E Fund ETF Trust II, an umbrella unit trust established under the laws of Hong Kong. The Sub-Fund is a passively managed exchange-traded fund falling within the scope of Chapter 8.6 of the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission (the "SFC"). The units of the Sub-Fund (the "Fund Units") are traded on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") like stocks. The investment objective is to provide investment returns that, before deduction of fees and expenses, closely correspond to the performance of the HKEX Tech 100 Net Total Return Index (the "Index"). To achieve the Sub-Fund's investment objective, the Fund Manager will adopt a full replication strategy or a representative sampling strategy, as deemed appropriate, to track the Index as closely as possible, thereby benefiting investors. The Sub-Fund may, at its sole discretion, switch between the full replication strategy and the representative sampling strategy without prior notice to investors.

As the index's constituent stocks and the sub-fund’s investments are concentrated in securities of companies primarily engaged in technology-related themes and the biotechnology and pharmaceutical sectors, and include investments in companies whose securities are listed on the Hong Kong Exchange and have substantial business operations in mainland China, the sub-fund is subject to both geographic concentration risk and sector concentration risk, which may result in higher net asset value volatility compared to funds with broader diversification.

This material is issued by E Fund Asset Management (Hong Kong) Company Limited. This material is for reference only and does not constitute an offer or recommendation to invest in fund units. This material is for display purposes only and must not be shown to any person in any jurisdiction where such display would be unlawful. Investing involves risks, and you may lose a substantial portion of your principal. Prior to investing, investors should carefully read the relevant investment risks described in the offering documents (including the 'Risk Factors' section) of the fund. This material has not been reviewed by the Securities and Futures Commission of Hong Kong.

For detailed important notices and disclaimers regarding the above fund, please visit E Fund (Hong Kong)'s website:

https://www.efunds.com.hk/tc/etfDisclaimers/

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