SGX All Healthcare Index outperforms regional benchmarks

Rising government spending to sustain further growth.

Driven by rising government expenditure on health, the SGX All Healthcare Index generated a total return of 16.2% in the past 12 months, higher than MSCI AC Asia Pacific Ex Japan Healthcare Index and the MSCI World Healthcare Index, which posted returns of -0.5% and 10.4% respectively.

The SGX All Healthcare Index has generated a total return of 3.0% in the year to date, while the MSCI AC Asia Pacific Ex Japan Healthcare Index and the MSCI World Healthcare Index have generated total returns of 3.6% and 4.6% respectively. However, on a 12-month basis, the SGX All Healthcare Index outperformed the other two indexes, registering a total return of 16.2% versus the MSCI AC Asia Pacific Ex Japan Healthcare Index’s -0.5% and the MSCI World Healthcare Index’s 10.4%.

"Rising affluence and ageing demographics are spurring growth in the Asian healthcare sector, as the continent’s rapidly ageing population ramps up demand for healthcare services. The share of population aged over 65 is expected to quadruple by 2050, but the number of doctors, nurses, hospitals and medical equipment still trail the per capita averages of the 34 OECD member countries," a report from the SGX My Gateway said.

The supply and demand create opportunities for private corporations to fill in the gap.

In Singapore, the government’s annual healthcare spending has doubled over the last five years, with enhanced subsidies and expanded services bringing the total to S$10 billion last year. The figure is expected to rise as Singapore’s population ages, with healthcare expenditure projected to increase by $900 million – up 9.6% – mainly to cater for higher patient subsidies as capacity, patient numbers and services expand.

Increased healthcare spending from the government in terms of subsidies and services will help boost the sector in Singapore as residents will be encouraged to seek healthcare services when required. This increase in spending is seen to directly benefit healthcare companies listed in the SGX.

The five-best performing stocks in the YTD in the SGX All Healthcare Index excluding International Healthway Corporation are Talkmed Group (+35.8%), Singapore Medical Group (+34.5%), Healthway Medical Corporation (+24.2%), AsiaMedic (+10.4%) and Singapore O&G (+10.2%). The five stocks averaged a total return of 23.0% and 94.3% in the YTD and one year respectively. All Index constituents averaged a YTD return of 6.7% and one-year return of 21.6%.