It's the right time to "tug-of-war" rebalancing at 3800 points! Is the medical devices sector about to "relay" the rally?

This week, the A-share market has been doing “sit-ups” around the 3800-point mark, with the speed of sector rotation noticeably accelerating. A clear example of this is the consecutive surge in semiconductor equipment, which has directly suppressed the previously hot “CPO.” Many sectors that are still at low levels have already seen changes in their fundamentals, making it worthwhile to adjust holdings for optimization—such as the medical device sector, which has already begun to see “action” from funds.

The 11th batch of centralized procurement has just been officially announced, with rules fully optimized. The “anti-involution” signal is clear, and the fundamentals of the medical device sector are accelerating their recovery, making it very promising for the market to strengthen further. Currently, the medical device index ETF (159898) has been continuously “attracting capital” for three days, amounting to 27 million, and has collected over 100 million in the past 20 days, with a slight increase of 0.34% during today’s session.

This momentum is something to note.

Many friends may wonder why funds are choosing to bottom-fish in medical devices? Simply put, under the triple resonance of policy bottom, performance bottom, and overseas benefits, the upward channel for medical devices is opening up, making now a good time to lay in wait.

1. Policy Push: From “Price Involution” to “Competing in Innovation”

Firstly, the biggest news in the medical circle these days is the new phrasing in the 11th batch of national centralized procurement documents—“stabilizing clinical outcomes, ensuring quality, preventing collusion in bidding, and countering involution.” This procurement will open bids on October 21, clearly optimizing price difference control to avoid “bad money driving out good,” which will undoubtedly serve as a major catalyst for the sector.

For example:

Before the centralized procurement, a certain cardiac stent was priced at 13,000, which dropped to 700 after procurement. Although patients benefit, the company’s profits are crushed, leading to insufficient innovation momentum. Now, with policies shifting to “ensuring quality + encouraging innovation,” medical device companies can free up profit margins for R&D, directly benefiting high-end imaging equipment, surgical robots, and AI-assisted diagnostics—these “hard technologies.”

2. Performance Recovery: From “Darkest Hour” to “Turning Point Upward”

According to Wind data, the net profit attributable to the parent company for the China Securities Medical Device Index is expected to reach 41.983 billion yuan in 2025, with a direct year-on-year growth rate jumping to +23.71%! It should be noted that the industry’s profits are still in negative growth in 2023, and it is now clearly past the “darkest hour.”

More importantly, from the second half of this year to next year, policies will continue to “support the bottom”: centralized procurement will no longer focus solely on low prices, the speed of innovative drugs and devices entering medical insurance will accelerate, and equipment renewal loans will receive interest subsidies. In simple terms, medical device companies now “have both profits to earn and directions to compete,” making a performance rebound a highly probable event.

3. Going Global: From “Made in China” to “Global Brand”

If policies and performance are “internal strengths,” then going global is the “external boost” for medical devices. The innovation of Chinese medical devices is no longer “knock-offs”—United Imaging’s MRI machines are sold in the U.S., Mindray’s monitors occupy 70% of the European market, and Nanwei Medical’s endoscopic consumables have become standard in German hospitals… By 2025, several device companies’ overseas business growth rates will have already exceeded domestic growth, and the proportion of international business may even surpass that of domestic!

Leading enterprises in various segments of medical devices are expected to see higher overseas business growth than domestic in H1 2025.

Sources: Company announcements, Wind, Guojin Securities Research Institute

It can be said that the growth space for Chinese medical device companies globally is very broad, and their valuations are gradually aligning with those of innovative device companies in the U.S., presenting significant potential!

The recently capital-attracting medical device index ETF (159898) is a quality choice for positioning in medical devices, as the target index has a comprehensive layout of leading medical device companies on the ChiNext and STAR Market, with the combined proportion exceeding 80%, making it very suitable to hold during the current narrow fluctuations of the index, setting up for the next main rally.

Author: ETF Gold Shovel

(Edited by: Liu Jing HZ010)

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