SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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<ul>
<li>
The Smartkarma Insight 2020 healthcare sector implications of COVID-19 panel discussed a renewed healthcare infrastructure drive by developed countries, localisation of healthcare supply chains yet need for global biopharma collaborations, and more frontline technology adoption. 
	 </li>
	<li>
Over the first five months of 2020, pandemic management across the globe has been the defining driver of the Healthcare Sector by a long mile, particularly in developed countries. This coincided with ASEAN healthcare stocks, traditional outperformers, lagging their regional &amp; global peers. 
	 </li>
	<li>Singapore healthcare stocks that bucked median declines across ASEAN in 2020 YTD with soaring participation included Medtecs Intl Corp, Biolidics, Clearbridge, Riverstone and UG Healthcare. Together, the five averaged 140% gains, with a 30-fold increase in turnover from 2019.</li>
</ul>
Traditionally more secular than cyclical, Healthcare Sectors across the world have been both laden and lauded in 2020 and are poised for significant transition and transformation in the years ahead. While longevity and population growth have been key regional healthcare drivers of the past, pandemic mamangment is now set to play a key role in re-shaping potential drivers for the key sector. 

For the 2020 year to 22 May, Healthcare stocks in ASEAN have been comparatively defensive when comparing median returns to benchmarks. However, the median total returns have lagged the relatively flat returns of healthcare stocks listed globally and across Asia Pacific.
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-05/median%20total%20returns%2026%20May.PNG' alt='Median Total Return ' />
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 <div class='content-caption'>Median Total Return </div>
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Longer term, the past 10 years of regional longevity, population growth and burgeoning consumer markets have seen healthcare stocks in ASEAN and Asia Pacific outpace their global peers based on median total returns. However the demands of pandemic management on multiple countries less prepared for the pandemic with healthcare services and products has seen more mixed stock returns over the past five months.

Long-term Healthcare Sector Implications of COVID-19 with Smartkarma

Last week, the Smartkarma Insight 2020 Asia-focused digital investment conference provided a panel session focused on the long-term healthcare Implications of COVID-19. Key themes established during the Healthcare panel (click <a href="https://www.youtube.com/watch?v=3lhki9edBBU&amp;list=PLgRR6L9L1ZBLwuAPf3CFZYSAUFODQUiLY&amp;index=6&amp;t=0s">here</a>) included:

<ul>
<li>
Need for adjustment to the new operating environment. The need for prudent management of operational costs, maintaining adequate capitalisation and cash flows while closely monitoring and adapting to risks. This is clearly important to any business, however considerable demands on the Healthcare Sector over the past five months, and the need to take opportunities when they arise, have poised this as a key driver. Kemp Dolliver, CIO at Cherrystone Hill Capital Management noted momentum in Asia Healthcare primary listings, secondary listings and mergers and acquisitions have continued into 2020. 
	 </li>
	<li>
Potential for a Healthcare Infrastructure Drive in the Development World - Ewan Davis, Director of Quadria Capital noted that the COVID-19 pandemic has highlighted a lack of access to care and fundamental lack of infrastructure and technology to test and manage outbreaks in multiple developed markets, and a call-to-arms for government and consumers alike to make sure healthcare infrastructure is amended with new services, products and channels of engagement. 
	 </li>
	<li>
More localisation of healthcare supply chains. Mr Davis also noted that while not specific to Healthcare, the supply chain shock of COVID-19 has seen this acceleration of the need for healthcare supply chain to localise. Mr Davis noted there had been a pre-existing drive to localise production of medical devices and pharmaceuticals and incorporation of more technology transfer, however this has evolved to an imperative. Mr Lim See Wah, Chairman &amp; CEO of Hyphens Pharma also noted that in time the industry would expect to see a return to equilibrium between localisation and globalisation, as companies would balance costs and risks. 
	 </li>
	<li>
Global biopharma collaborations - While governments look to localise, Mr Dolliver noted regional biopharma companies that are producing globally competitive products approved in local markets after significant years of research and development will still need to license out, and form partnerships with global multinational corporations in order to achieve global distribution scale. 
	 </li>
	<li>
Greater technology adoption - Jonathan Sudharta, CEO &amp; Co-Founder of Halodoc, highlighted that the Healthcare Sector has become more comfortable with using technology in frontline and diagnostic services which is expected to see significant impacts on triage services. Mr Lim See Wah also added that COVID-19 is a catalyst for accelerating technology adoption by the Sector and that overall digitalisation can play a key role in increasing efficient delivery of healthcare services.</li>
</ul>
 Singapore Healthcare Stocks with Surges in Performance and Participation in 2020 YTD

As noted above, median total returns of Singapore and ASEAN healthcare stocks have lagged the relatively flat returns of healthcare stocks listed globally and across Asia Pacific in the 2020 year to 22 May. However a number of stocks have outpaced the group base with products and services more relevant to pandemic management.

Singapore healthcare stocks that have delivered gains, with a surge in participation in the stock as gauged by average daily turnover included Medtecs International Corporation, Biolidics, Clearbridge, Riverstone Holdings, and UG Healthcare. With average total returns of 139.9%, together the five stocks averaged S$16.73 million in daily turnover for the 2020 year through to 22 May, compared to their combined average daily turnover of $0.52 million in 2019.

Detailed in the table below, all five stocks were amongst the 100 most traded stocks by turnover in the 2020 year through to 22 May.

<table class="table table-striped"><tbody>
<tr>
<td>
			Most Actively Traded Healthcare stocks in 2020 to 22 May
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			2020 to 22 May  Average Daily Turnover S$M
			</td>
			<td>
			2019 Average Daily Turnover S$M
			</td>
			<td>
			2020 to 22 May Total Return %
			</td>
			<td>
			Price to Book Ratio (x)
			</td>
		</tr>
<tr>
<td>
			Medtecs Intl Corp
			</td>
			<td>
			546
			</td>
			<td>
			          97.25
			</td>
			<td>
			6.85
			</td>
			<td>
			0.03
			</td>
			<td>
			378.4
			</td>
			<td>
			1.1
			</td>
		</tr>
<tr>
<td>
			Biolidics
			</td>
			<td>
			8YY
			</td>
			<td>
			          98.94
			</td>
			<td>
			3.47
			</td>
			<td>
			0.03
			</td>
			<td>
			55.1
			</td>
			<td>
			11.9
			</td>
		</tr>
<tr>
<td>
			Clearbridge
			</td>
			<td>
			1H3
			</td>
			<td>
			        106.12
			</td>
			<td>
			2.90
			</td>
			<td>
			0.28
			</td>
			<td>
			28.3
			</td>
			<td>
			2.0
			</td>
		</tr>
<tr>
<td>
			Riverstone Holdings
			</td>
			<td>
			AP4
			</td>
			<td>
			     1,385.83
			</td>
			<td>
			2.02
			</td>
			<td>
			0.16
			</td>
			<td>
			102.2
			</td>
			<td>
			5.4
			</td>
		</tr>
<tr>
<td>
			UG Healthcare
			</td>
			<td>
			41A
			</td>
			<td>
			          64.71
			</td>
			<td>
			1.50
			</td>
			<td>
			0.01
			</td>
			<td>
			135.7
			</td>
			<td>
			1.5
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			139.9
			</td>
			<td>
			4.4
			</td>
		</tr>
</tbody></table>
Source: SGX, Bloomberg, Thomson Reuters  (Data as of 22 May 2020). Note Riverstone Holdings is listed on the Mainboard, with the remaining four stocks listed on Catalist

Note, other Healthcare-related stocks that were also amongst the 100 most traded stocks by turnover in the 2020 year to 22 May included ParkwayLife REIT, First REIT, Raffles Medical Group, Haw Par Corporation and Trendlines. Together the five stocks averaged a 7.2% decline in total return, with a total of S$10.20 million in turnover for the period, almost double their S$5.75 million combined turnover in 2019.
</body></html>





The Smartkarma Insight 2020 healthcare sector implications of COVID-19 panel discussed a renewed healthcare infrastructure drive by developed countries, localisation of healthcare supply chains yet need for global biopharma collaborations, and more frontline technology adoption. 
	 
	
Over the first five months of 2020, pandemic management across the globe has been the defining driver of the Healthcare Sector by a long mile, particularly in developed countries. This coincided with ASEAN healthcare stocks, traditional outperformers, lagging their regional &amp; global peers.  
	 
	Singapore healthcare stocks that bucked median declines across ASEAN in 2020 YTD with soaring participation included Medtecs Intl Corp, Biolidics, Clearbridge, Riverstone and UG Healthcare. Together, the five averaged 140% gains, with a 30-fold increase in turnover from 2019.

Traditionally more secular than cyclical, Healthcare Sectors across the world have been both laden and lauded in 2020 and are poised for significant transition and transformation in the years ahead. While longevity and population growth have been key regional healthcare drivers of the past, pandemic mamangment is now set to play a key role in re-shaping potential drivers for the key sector. 

For the 2020 year to 22 May, Healthcare stocks in ASEAN have been comparatively defensive when comparing median returns to benchmarks. However, the median total returns have lagged the relatively flat returns of healthcare stocks listed globally and across Asia Pacific.



      
    
    Median Total Return 


Longer term, the past 10 years of regional longevity, population growth and burgeoning consumer markets have seen healthcare stocks in ASEAN and Asia Pacific outpace their global peers based on median total returns. However the demands of pandemic management on multiple countries less prepared for the pandemic with healthcare services and products has seen more mixed stock returns over the past five months.

Long-term Healthcare Sector Implications of COVID-19 with Smartkarma

Last week, the Smartkarma Insight 2020 Asia-focused digital investment conference provided a panel session focused on the long-term healthcare Implications of COVID-19. Key themes established during the Healthcare panel (click here) included:



Need for adjustment to the new operating environment. The need for prudent management of operational costs, maintaining adequate capitalisation and cash flows while closely monitoring and adapting to risks. This is clearly important to any business, however considerable demands on the Healthcare Sector over the past five months, and the need to take opportunities when they arise, have poised this as a key driver. Kemp Dolliver, CIO at Cherrystone Hill Capital Management noted momentum in Asia Healthcare primary listings, secondary listings and mergers and acquisitions have continued into 2020. 
	 
	
Potential for a Healthcare Infrastructure Drive in the Development World - Ewan Davis, Director of Quadria Capital noted that the COVID-19 pandemic has highlighted a lack of access to care and fundamental lack of infrastructure and technology to test and manage outbreaks in multiple developed markets, and a call-to-arms for government and consumers alike to make sure healthcare infrastructure is amended with new services, products and channels of engagement.  
	 
	
More localisation of healthcare supply chains. Mr Davis also noted that while not specific to Healthcare, the supply chain shock of COVID-19 has seen this acceleration of the need for healthcare supply chain to localise. Mr Davis noted there had been a pre-existing drive to localise production of medical devices and pharmaceuticals and incorporation of more technology transfer, however this has evolved to an imperative. Mr Lim See Wah, Chairman &amp; CEO of Hyphens Pharma also noted that in time the industry would expect to see a return to equilibrium between localisation and globalisation, as companies would balance costs and risks. 
	 
	
Global biopharma collaborations - While governments look to localise, Mr Dolliver noted regional biopharma companies that are producing globally competitive products approved in local markets after significant years of research and development will still need to license out, and form partnerships with global multinational corporations in order to achieve global distribution scale. 
	 
	
Greater technology adoption - Jonathan Sudharta, CEO &amp; Co-Founder of Halodoc, highlighted that the Healthcare Sector has become more comfortable with using technology in frontline and diagnostic services which is expected to see significant impacts on triage services. Mr Lim See Wah also added that COVID-19 is a catalyst for accelerating technology adoption by the Sector and that overall digitalisation can play a key role in increasing efficient delivery of healthcare services.

 Singapore Healthcare Stocks with Surges in Performance and Participation in 2020 YTD

As noted above, median total returns of Singapore and ASEAN healthcare stocks have lagged the relatively flat returns of healthcare stocks listed globally and across Asia Pacific in the 2020 year to 22 May. However a number of stocks have outpaced the group base with products and services more relevant to pandemic management.

Singapore healthcare stocks that have delivered gains, with a surge in participation in the stock as gauged by average daily turnover included Medtecs International Corporation, Biolidics, Clearbridge, Riverstone Holdings, and UG Healthcare. With average total returns of 139.9%, together the five stocks averaged S$16.73 million in daily turnover for the 2020 year through to 22 May, compared to their combined average daily turnover of $0.52 million in 2019.

Detailed in the table below, all five stocks were amongst the 100 most traded stocks by turnover in the 2020 year through to 22 May.




			Most Actively Traded Healthcare stocks in 2020 to 22 May
			
			
			SGX Code
			
			
			Mkt Cap S$M
			
			
			2020 to 22 May  Average Daily Turnover S$M
			
			
			2019 Average Daily Turnover S$M
			
			
			2020 to 22 May Total Return %
			
			
			Price to Book Ratio (x)
			
		


			Medtecs Intl Corp
			
			
			546
			
			
			          97.25
			
			
			6.85
			
			
			0.03
			
			
			378.4
			
			
			1.1
			
		


			Biolidics
			
			
			8YY
			
			
			          98.94
			
			
			3.47
			
			
			0.03
			
			
			55.1
			
			
			11.9
			
		


			Clearbridge
			
			
			1H3
			
			
			        106.12
			
			
			2.90
			
			
			0.28
			
			
			28.3
			
			
			2.0
			
		


			Riverstone Holdings
			
			
			AP4
			
			
			     1,385.83
			
			
			2.02
			
			
			0.16
			
			
			102.2
			
			
			5.4
			
		


			UG Healthcare
			
			
			41A
			
			
			          64.71
			
			
			1.50
			
			
			0.01
			
			
			135.7
			
			
			1.5
			
		


			Average
			
			
			 
			
			
			 
			
			
			 
			
			
			 
			
			
			139.9
			
			
			4.4
			
		

Source: SGX, Bloomberg, Thomson Reuters  (Data as of 22 May 2020). Note Riverstone Holdings is listed on the Mainboard, with the remaining four stocks listed on Catalist

Note, other Healthcare-related stocks that were also amongst the 100 most traded stocks by turnover in the 2020 year to 22 May included ParkwayLife REIT, First REIT, Raffles Medical Group, Haw Par Corporation and Trendlines. Together the five stocks averaged a 7.2% decline in total return, with a total of S$10.20 million in turnover for the period, almost double their S$5.75 million combined turnover in 2019.



New Drivers for the Global Healthcare Industry in 2020 and Beyond

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New Drivers for the Global Healthcare Industry in 2020 and Beyond

The Smartkarma Insight 2020 healthcare sector implications of COVID-19 panel discussed a renewed healthcare infrastructure drive by developed...

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