Asian investors are taking a shine to ASX healthcare stocks. Pic: Getty Images
Health & Biotech
Cashed-up Singaporean family offices and long-only hedge funds, along with Hong Kong institutional investors, are bullish on ASX healthcare stocks, believing the sector has plenty of upside.
Spark+ is a corporate advisory firm that links ASX companies with investors in the Asia Pacific region. Equity analyst Stefan Tan told Stockhead several factors about the ASX healthcare sector were attractive to Asian investors, including its entrepreneurial nature.
“The ASX healthcare sector has a much more entrepreneurial offering so offers a diversification opportunity for Asian investors,” he said.
“Very rarely do you see early-stage, pre-clinical healthcare companies being listed on Asian exchanges, so they are difficult to find within Asia.”
With offices across Singapore and Australia, Tan said more than 50% of the Spark+ investor network have shown keen interest or have already invested in the ASX healthcare sector.
“To create a truly holistic portfolio a lot of our conservative investors are willing to allocate a discretionary amount towards early to clinical-stage companies on the ASX with upside potential,” he said.
Tan said there were differences between how Singaporean family offices and long-only funds approached investing in the ASX healthcare sector as opposed to Hong Kong institutional hedge funds.
“Our Singapore investors typically do more diligence and take their time assessing investments including the ASX healthcare space,” Tan said.
“Our Hong Kong institutional investors tend to make decisions far quicker than our Singaporean investors and largely act on sufficient liquidity metrics.”
Tan said the ASX tended to have stronger liquidity relative to smaller exchanges in Asia, such as Singapore.
“There are higher volumes being traded on the ASX so it’s easier to get in and out,” he said.
“The listing threshold is also slightly more relaxed on the ASX relative to a lot of exchanges in Asia.
“The Singapore Stock Exchange has very high regulatory thresholds, which can deter listings and potential investors.”
Furthermore, Tan said investing in healthcare can not only drive financial returns but also contributes to meaningful advancements in patient care, disease prevention and overall public health.
“Besides potential financial gains I think investing for a social benefit is a big driving force as well,” he said.
Tan said single family offices headquartered in Singapore grew by 43% year-on-year to ~2000 in CY24.
“There is a trend of foreign ultra-high-net-worth people setting up family offices here in Singapore because of a variety of factors,” he said.
“We have a transparent regulatory environment, stable political climate, reliable arbitration system, as well as availability of a variable capital company (VCC) structure.”
Tan said a VCC was a flexible fund structure introduced in 2020 to boost Singapore’s fund hub status, enhance capital management, governance, and efficiency.
“In our experience these family offices are looking to allocate capital to more early-stage healthcare companies on the ASX as a medium-to-long term investment,” he said.
“Family offices in the region are generally more patient investors with longer investment horizons.
“The opportunity for ASX healthcare companies lies in being able to reach out to these family offices headquartered in Singapore.”
The S&P/ASX healthcare index lagged the benchmark S&P/ASX 200 index in 2024, despite strong underlying earnings growth.
Tan said markets have in recent years been mainly driven by mood and momentum.
However, with uncertainty around geopolitics globally, especially the US, he believes there could be a shift back to fundamental investing. That could in turn benefit the ASX healthcare sector.
“The uncertainty around the US could sway mood and momentum away from the markets, with more participants focusing on fundamentals and intrinsic qualities of the companies,” Tan said.
“We feel that there is a decent likelihood that fundamental investing will come back into play this year.”
Furthermore, Tan said that healthcare was a defensive sector, which tended to perform during times of economic uncertainty because its products and services were generally always in demand.
Tan said Spark+ had worked with several ASX healthcare sector names, ranging from screening and diagnostics to oncology treatments and drug repurposing.
He said these include BCAL Diagnostics (ASX:BDX), which is developing a non-invasive blood test to detect breast cancer early and Truscreen Group (ASX:TRU), with AI-driven cervical cancer screening.
“We think these diagnostics-screening companies have very attractive technology that is adjunct to the current standard of care,” Tan said.
“We also like the de-risked profile of a drug repurposing company like Island Pharmaceuticals (ASX:ILA) which has a near-term commercialisation prospect for a treatment against flaviviruses, including dengue.”
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
BCAL Diagnostics, Truscreen Group and Island Pharmaceuticals are current clients of Spark+.
At Stockhead, we tell it like it is. While Island Pharmaceuticals is a Stockhead advertiser, the company did not sponsor this article.
Health & Biotech
Health & Biotech
Health & Biotech
Mining
Health & Biotech
Mining
