Bellevue Emerging Markets Healthcare

Emerging-market equities fell 1.4% in June, weighed down by Hong Kong's Hang Seng Index, which tumbled 8.6%, Brazil's Ibovespa, which declined 3.2%, and South Korea's Kospi, which lost 2.9%. In contrast, India's Nifty 50 gained 2.1%, while China's CSI 300 advanced 2.0%.

The emerging-markets healthcare sector edged up 0.1% in June, outperforming the broader market as investors grew increasingly cautious about stretched valuations in artificial intelligence (AI)-related technology stocks. The Bellevue Emerging Markets Healthcare Fund gained 0.6%, outperforming its benchmark during the month.

PharmaEssentia (+41.9%), WuXi AppTec (+17.9%), Max Healthcare (+17.4%), Apollo Hospitals (+6.6%), and Sun Pharmaceutical (+3.9%) ranked among the fund's top contributors during the month. PharmaEssentia advanced after receiving approval for a new indication in Taiwan, while investor sentiment remained constructive on the company's longer-term prospects ahead of a potential US approval. WuXi AppTec rebounded as investors became more comfortable with the geopolitical risks surrounding US-China relations following an extended period of uncertainty. Max Healthcare and Apollo Hospitals recovered after a broker conference in India reinforced confidence in the long-term outlook for the country's private hospital sector, prompting investors to view the recent share-price weakness as a buying opportunity. Sun Pharmaceutical gained after investors welcomed the continued progress of its planned acquisition of a US specialty pharmaceutical company, which is expected to strengthen the company's long-term growth prospects and expand its presence in the US market.

Akeso (-25.5%), Sino Biopharmaceutical (-10.7%), Celltrion (-8.4%), Innovent Biologics (-4.6%), and BeOne Medicines (-3.7%) were the largest detractors from the fund's absolute performance during the month. Akeso, Sino Biopharmaceutical, Innovent Biologics, and BeOne Medicines remained under pressure as renewed US-China tensions weighed on sentiment toward China's biotechnology sector. Investors reacted to proposals that could restrict US companies from licensing drug candidates developed by Chinese biotechs, raising concerns over a key growth channel for the industry. Chinese biotechnology companies have increasingly relied on out-licensing agreements with US pharmaceutical companies to monetize and advance their development pipelines.

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 industry-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 to struggle with quality and long waiting times, many affluent Brazilians are increasingly turning to private providers for better services. One notable example of the beneficiaries of this trend can be found in hospital chains, which are building vertically integrated ecosystems to capture sustainable long-term growth.