What Investors Should Know About The Healthcare Sector In Singapore And Asia
Local bourse operator Singapore Exchange Limited (SGX: S68) invited The Motley Fool Singapore to a media event held yesterday that discussed the healthcare sector in Singapore and Asia.
Here are the important things I learnt from the event:
1. Singapore’s South East Asian neighbours (Thailand, Brunei, Vietnam, Malaysia, and Indonesia) are experiencing an aging population. Here’s a table showing projected changes in each country’s percentage of its population aged 65 and over from 2015 to 2050:
You can that the percentage of the population aged 65 and over is forecast to grow significantly for many of Singapore’s South East Asian neighbours.
2. On average in Asia, there were only 1.2 doctors per 1,000 people in 2013. This is much lower than the OECD (Organisation for Economic Co-operation and Development) average of 3.2 doctors per 1,000 people in the same year. For more perspective on China, it had around 1.4 doctors per 1,000 people in 2013. The same ratio in Singapore is nearly 2.
Some healthcare stocks in Singapore – such as Raffles Medical Group Ltd (SGX: BSL) and the newly-listed Aoxin Q & M Dental Group Ltd (SGX: 1D4) – are either expanding aggressively into China, or count the giant Asian nation as a key market.
3. The number of hospital beds in Asia is “one third less” than the OECD average.
4. Healthcare stocks have historically been resilient. During the market correction that occurred from April 2015 to January 2016, the Straits Times Index (SGX: ^STI) had declined by 24.6%. Even REITs fell by 14.3% on the whole. Healthcare stocks however, slipped by just 5.2%.
5. SGX has developed a benchmark for the Healthcare sector called the SGX All Healthcare Index. It includes hospital owners, clinic operators, pharmaceutical companies, healthcare asset owners, and healthcare equipment suppliers (medical rubber glove makers such as Riverstone Holdings Limited (SGX: AP4) and Top Glove (SGX: BVA)(KLSE: 7113.KL) belong to the last group).
The SGX All Healthcare Index uses a stock’s free float (essentially the proportion of a company’s shares that are available to be freely traded on the market) as one of its weighting criteria. Unfortunately, for investors who are looking for a convenient way to invest in a basket of Singapore-listed healthcare stocks, there’s currently no ETF-issuer demand to create an exchange-traded fund that tracks the SGX All Healthcare Index.