Bellevue Asia Pacific Healthcare (Lux)

The MSCI World index climbed higher in November, 7% in USD, extending the upward trend that began in the middle of October. Macroeconomic data continued to move the markets much more than company-specific news. Lower-than-expected October inflation numbers in the US were cheered by investors, for example, although inflation was still clocked at a high 8% yoy. Nevertheless, that data readout gave risk assets a big boost as it fueled hopes that the Fed would moderate the pace of its rate increases compared to its previous two FOMC meetings. Jerome Powell confirmed this market expectation shortly afterwards during a speech on November 30 when he flagged an increase of 50 basis points at the bank’s next policy meeting in December. Subsiding US inflation and falling bond yields weakened the dollar too, which helped to lead stocks in emerging markets and the entire Asia-Pacific region to higher ground.

After the very negative reaction to the 20th National Congress of the Communist Party, stock markets in Hong Kong and mainland China turned positive in November on hopes that China’s economy would continue to gain momentum thanks to the gradual unwinding of government measures to control COVID-19. Even widespread protests against the government's zero-COVID policy, which were stamped out after a few days, were unable to hold back the market rally. Large-scale campaigns to encourage citizens to get vaccinated or boosted, especially those 80 and older, have been launched so that the traditional Chinese New Year celebrations at the end of January can still take place. The MSCI Asia-Pacific Index surged 16.1% in the wake of these developments. The defensive healthcare sector was unable to keep pace with the broader market but still delivered a pleasing return of 9.4%.  

The Japanese pharma company Eisai presented detailed data from its Phase III study of Lecanemab at the CTAD Alzheimer’s conference. The results indicated that at 18 months the patients who were taking lecanemab continued to show less decline on clinical measures of cognition and function compared to the placebo group. Patients receiving lecanemab still showed a decline, but disease progression was slower compared to placebo. There’s hope that longer-term trials will further widen the two curves. Lecanemab also met all secondary endpoints and its safety profile did not deteriorate compared to the Phase II trial. The US FDA is expected to decide whether to grant accelerated approval to lecanemab on January 6, 2023. Key factors will be the cost of treatment and whether the US CMS will cover the cost of treatment under Medicare.

In November positions were opened in Fisher & Paykel, Ashai Intecc, Zai Lab and Shin Nippon Biomedical. Shareholdings of Hengrui, Dr. Reddy’s, Bangkok Dusit and Beigene were increased. Positions in Divi’s Lab, Ono Pharma and Otskua were closed and shareholdings of Olympus, CSPC Pharma and Terumo were reduced.

Asia is the most dynamic growth region in the world and it accounts for more than half of the world's population. Asian emerging markets are forecast to account for more than 50% of global GDP by 2050. As household incomes rise, the economic growth model of Asian countries will shift from manufacturing to the services sector. A growing middle class fuels demand for modern medicine. Healthcare ranks increasingly high on their wish list. Billions are being invested in infrastructure, technology and research to modernize the healthcare systems in emerging market countries. This is giving a greater swath of the population access to better healthcare. Meanwhile rapid population aging is also stoking demand for healthcare. In 30 years’ time there will be 400 to 500 million people over 60 in China alone, and they will have a growing need for modern health services and medicines.

Japan, which has been referred to as “the world's demographic laboratory”, has championed cutting-edge innovation for decades. The Land of the Rising Sun boasts technology leadership in numerous fields, ranging from therapeutic antibody technology, immunotherapy and robotics to digitalization, diagnostics and medical imaging systems. The fund offers defensive access to Asian emerging markets as well as exciting investment opportunities in technology leaders throughout the entire region. It invests in the entire healthcare system value chain, from generic drug producers and biotechnology companies to medical device manufacturers and digital health specialists.