China is home to one of the largest healthcare markets and, from an investment prospective, one of the most compelling in the emerging world. Among the reasons for that are a burgeoning biotechnology industry, an aging population, and increasing digitization, among other factors.
The KraneShares MSCI All China Health Care Index ETF (KURE) stands out among the relevant exchange traded funds. KURE, which turned five years old earlier this year, follows the MSCI China All Shares Health Care 10/40 Index. That gauge includes large-, mid-, and small-cap healthcare firms listed in Hong Kong, mainland China, and the U.S.
KURE is relevant at time when, as is the case in the U.S., Chinese healthcare providers and pharmaceutical companies are increasingly leveraging technology, including telemedicine. In China medicine, telehealth can intersect with other disruptive technologies, including fintech.
“Telemedicine is an example, he said. China has several advantages in developing digitization in healthcare and has incentives to follow this path. A prominent example of these advantages is mobile money, such as Alipay and WeChat Pay, but in the US people rarely use mobile money,” Lia Zhu reported for China Daily, citing Sean Sylvia, an assistant professor of health policy and management at the University of North Carolina at Chapel Hill.
While KURE is primarily allocated to biotech and pharmaceutical companies, those firms and policymakers regulating China’s healthcare sector increasingly depend on technology to bolster efficiencies and contain costs. Those efforts could pay dividends over the long haul for KURE member firms.
“In China, artificial intelligence, big data and the sharing economy enable people to get health information, and at the administration level big data is being used to guide public health policies and inform management decisions,” according to China Daily.
Other data points indicate that there’s an attractive runway for growth in China’s healthcare sector. Just a few years ago, the country spent just 5.4% of GDP on healthcare, according to the World Health Organization, but with the Chinese population rapidly aging, it’s likely inevitable that this percentage will surge in years ahead, perhaps benefiting KURE components in the process.
In addition, exports of Chinese’s healthcare products are rising — a theme that expands beyond personal protective equipment (PPE) that was in high demand due to the COVID-19 crisis.
“Healthcare spending in China isn’t going anywhere but up—even assuming a structural slowdown in the country’s overall growth rate after the pandemic. But investors who want to jump into the sector may need to pay up, at least for exposure to the top domestic firms,” reported Jacky Wong for the Wall Street Journal.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.