Bellevue Emerging Markets Healthcare

Emerging-market equities gained 3.4% in August, supported by strong gains in South Korea's KOSPI (+8.9%) and China's CSI 300 (+1.5%), despite declines in India's Nifty 50 (-0.8%), Hong Kong's Hang Seng Index (-1.0%) and Brazil's Ibovespa (-2.3%).

Emerging-markets healthcare stocks gained 8.7% in August, outperforming the broader market as investors grew increasingly cautious about stretched AI-related technology valuations and the sustainability of capital spending. The Bellevue Emerging Markets Healthcare Fund gained 9.6% during the month, outperforming its benchmark.

GenScript (+87.7%), PharmaEssentia (+34.2%), WuXi Biologics (+26.1%), Innovent (+19.8%) and WuXi AppTec (+18.2%) were among the fund's top contributors during the month. GenScript benefited from the broader wave of enthusiasm around AI-driven drug design following its results, with a strong order backlog further reinforcing earnings upside. PharmaEssentia maintained strong momentum, driven by the continued sales ramp-up of its key product alongside an upcoming indication expansion that is expected to broaden its addressable market. WuXi Biologics delivered strong results on the back of better-than-expected revenue and margin expansion, prompting the company to raise its full-year guidance. Innovent also reported strong results, and more importantly, management reaffirmed its confidence in achieving its 2027 targets while announcing a longer-term 2030 goal that investors viewed positiviely. WuXi AppTec's momentum continued following its strong results, with a relatively attractive valuation providing further upside potential.

Alkem (-6.9%), Max Healthcare (-4.8%), Cipla (-4.1%), Akeso (-4.3%) and Fortis (-3.7%) were the fund's largest detractors from absolute performance during the month. Alkem's results were weak, with growth trailing peers in the Indian market. Max Healthcare's results were strong overall, but oncology remains a challenge, as the government's price cap on oncology drugs weighed on margins. Cipla saw some profit-taking following its results, with the upcoming launch of a respiratory product representing the next potential catalyst. Akeso's results were weaker than expected due to softer sales of its two key innovative drugs, though both remain at an early stage of their launch trajectorie. Fortis posted good results, but margins became a concern due to the employee share option plan (ESOP), putting the stock under pressure.

All performance data in USD/B shares.

Emerging markets are home to some of the world’s most dynamic growth economies and account for more than half of the global population. By 2050, Asian emerging economies are expected to generate over 50% of global economic output. As incomes rise, many of these economies are shifting from industrial-led growth toward service-driven models. A growing middle class is fueling demand for modern medicine, as health becomes an increasingly important priority. Significant investments in infrastructure, technology, and research are accelerating the modernization of healthcare systems, broadening access to higher-quality care. At the same time, demographic shifts are adding to demand. In 25 years’ time, China alone is expected to have nearly 400 million people over the age of 65, creating a significant need for advanced healthcare services and medicines.

Beyond Asia, attractive investment opportunities are also emerging in Brazil’s rapidly expanding private healthcare market. As the public healthcare system continues struggles with quality and long waiting times, many affluent Brazilians are increasingly turning to private providers for better services. One notable example of beneficiaries of this trend can be found in hospital chains, which are building vertically integrated ecosystems to capture sustainable long-term growth.