SGX Market Updates

Comparatively Strong SG All Healthcare Index Added to Gains in 3Q20


PUBLISHED ON |

30 September 2020

  • The iEdge SG All Healthcare Index has generated a 30% total return in 3Q20, adding to its 37% total return in 1H20. Volatility of the Index continued to climb, with the 90 day annualised volatility of the Index increasing from 35% at the end of June to 45% as of 29 Sep.

  • Combined average daily turnover of iEdge SG All Healthcare Index constituents in 2020 increased to $66 million a day as of 29 Sep, from $36 million as of 30 June, on the back of comparatively wider price swings of medical suppliers attracting short-term investors with more risk-to-return tolerance.

  • For its FY20 (ending 31 Aug) Top Glove’s net profit increased 412% YoY. This coincided with a 12M 410% total return for the stock through to 17 Sep, the day its FY20 results were reported. Top Glove estimates glove demand will grow by 20% per annum in 2020, 25% in 2021 and 15% post-COVID-19.

  • Also on 17 Sep, the Employees Provident Fund Board of Malaysia become a substantial shareholder of Riverstone Holdings with the acquisition of 2 million shares increasing its direct interest in Riverstone Holdings from 4.86 per cent to 5.13 per cent. 




Big Swings of Big Global Healthcare Stocks

The first half of 2020 saw sharp economic contractions across the world with lockdowns containing the spread of COVID-19 to 10 million people with a 4.9% mortality rate. The tally of COVID-19 infections has since more than tripled to 33 million cases, with effective treatments and more prevalent testing seeing the total mortality rate decline from 4.9% to 3.0%.

While the social and economic consequences of lockdowns to contain COVID-19 have been the major policy and market drivers in 2020, containment measures have directly impacted the demand for healthcare products. This has naturally impacted the business of listed providers of medical equipment and supplies. From the end of June through to 29 September, the top quartile of global healthcare stocks by market value generated a 3% median total return (with average total returns of 12%) on current median 90 day volatility of 48%.

This has brought the median total return of the top quartile of global healthcare stocks by market value to 20% and the average total return to 120%, the latter on skewed outlier performances of providers of medical equipment and supplies.



Continued Global Focus on Medical Supply Stocks Extends to Singapore

From the end of June through to 29 September, the iEdge SG All Healthcare Index generated a 29% price gain, adding to its 35% gain in the first half of 2020. This brought its 2020 year to 29 September price return to 74%. The 90-day volatility of the Index also continued to rise in the third quarter, moving from 35% at the end of June to 45% as of 29 September.

The big swings of the healthcare stocks that represent the sub-industries of medical supplies and equipment continued to attract active investors seeking shorter-term trading returns with increased risk. This saw the combined average daily turnover of the full constituents of the iEdge SG All Healthcare rise from S$36 million a day as of the end of June, to S$66 million a day as of 29 September. The combined average daily turnover of the constituents of the iEdge SG All Healthcare Index in 2019 was less than S$10 million a day. 


iEdge SG All Healthcare Index Returns, Turnover and Volatility



Recent iEdge SG All Healthcare Index Rebalance Reveals Seven Index Heavyweights 

The combined market capitalisation of the constituents of the iEdge SG All Healthcare Index is S$54 billion which represents 7% of the total market capitalisation of all stocks listed on Singapore Exchange at S$798 million. Business activities within the healthcare sector include, but are not limited to, healthcare providers, manufacturing and distribution of medical equipment and supplies, pharmaceutical companies, biotechnology companies or healthcare asset owners.

The most recent rebalance of the iEdge SG All Healthcare index took place on 28 September, based on market values as of 31 August 2020. Index constituents have their index weights capped at 10% at each semi-annual rebalance date. As a result of this, the ‘excess index weights’ are then proportionally redistributed to the remaining constituents. The weights, as of the 28 September balance are tabled below.


iEdge SG All Healthcare Index
10 Largest Weights
(as of 28 Sep)
SGX
Code
Index
Weight
as of 29 Sep
Mkt Cap
(S$M)
Total
Return
Sep MTD
Total
Return
Sep QTD
Total
Return
2020 YTD
2020 Average
Daily Turnover
as of 29 Sep
(S$M)
180-Day
Volatility
TOP GLOVE CORP BHD BVA 10.0% 22,604 -2% 58% 438% 5.79 92%
IHH HEALTHCARE BHD Q0F 10.0% 14,921 -3% -4% -8% 0.30 33%
PARKWAYLIFE REIT C2PU 10.0% 2,474 9% 24% 27% 3.36 36%
HAW PAR CORP LTD H02 10.0% 2,068 -1% -3% -25% 1.74 24%
RIVERSTONE HOLDINGS AP4 10.0% 2,542 -14% 32% 275% 9.51 74%
MEDTECS INTERNATIONAL CORP 546 10.0% 615 -26% 197% 2955% 20.52 175%
RAFFLES MEDICAL GROUP BSL 10.0% 1,501 -1% -10% -17% 1.46 30%
FIRST REIT AW9U 4.5% 350 -12% -37% -54% 1.87 66%
TIANJIN ZHONGXIN PHARM  T14 4.0% 2,147 -1% -5% 5% 0.49 44%
UG HEALTHCARE 41A 2.8% 523 12% 116% 1721% 6.94 160%
Average       -4% 37% 532%   73%
Median       -2% 10% 16%   55%

Source: SGX, Bloomberg, Refinitiv (Data as of 29 September 2020)



As tabled above, there is a significant difference between the median and average total returns of the 10 largest weights of the Index. The asymmetry in the median and average returns was also observed globally with the top quartile of global healthcare stocks generating an average total return of 20% with median total returns of 120% in the 2020 year to 29 September as noted above.

The next 10 largest weights of the iEdge SG All Healthcare Index are tabled below. With less stocks among the 10 that focus on medical supplies, there was less variation between the average and median total returns.


iEdge SG All Healthcare Index
Next 10 Largest Weights
(as of 28 Sep)
SGX
Code
Index
Weight
as of 29 Sep
Mkt Cap
(S$M)
Total
Return
Sep MTD
Total
Return
Sep QTD
Total
Return
2020 YTD
2020 Average
Daily Turnover
as of 29 Sep
(S$M)
180-Day
Volatility
Q&M DENTAL GROUP SINGAPORE QC7 2.1% 366 0% 10% 2% 0.53 46%
THOMSON MEDICAL GROUP A50 2.0% 1,322 -6% -11% -22% 0.53 46%
TALKMED GROUP LTD 5G3 1.8% 501 -4% -10% -24% 0.01 54%
VICPLAS INTERNATIONAL LTD 569 1.7% 170 -41% 189% 260% 2.52 157%
IX BIOPHARMA LTD 42C 1.6% 158 -13% -8% 2% 1.61 111%
CLEARBRIDGE HEALTH LTD 1H3 1.2% 97 -8% -6% 15% 2.41 90%
SINGAPORE MEDICAL GROUP 5OT 1.1% 123 0% 4% -14% 0.39 61%
BIOLIDICS LTD 8YY 1.0% 90 -9% 11% 39% 3.10 127%
HEALTHWAY MEDICAL CORP 5NG 0.8% 145 -3% 7% 23% 0.30 84%
ISEC HEALTHCARE 40T 0.6% 163 2% 5% -10% 0.00 50%
Average       -8% 19% 27%   83%
Median       -5% 5% 2%   73%

Source: SGX, Bloomberg, Refinitiv (Data as of 29 September 2020)



Top Glove Reported 412% Net Profit Growth in FY20 & Provided Outlook Beyond 2020

On 17 September, Top Glove Coproation (SGX:BVA) (“Top Glove”) reported its net profit increased 412% from 365 million ringgit in FY19 to 1.9 million ringgit in FY20 (ending 31 August). The FY20 results were released during the session lunch break, with the afternoon session seeing the stock retrace 9% of its preceeding gains. This brought the 12 month total return of Top Glove to 407%, which was relatively symmetric to the reported FY20 net profit growth of 412%.

Top Glove has been a top 50 Singapore stock by turnover in the year thus far with an average of S$5.8 million of shares changing hands on a daily basis in 2020. In addition to being ASEAN’s biggest healthcare stock, Top Glove also emerged its position as the world’s largest manufacturer of nitrile gloves, in addition to being the world’s largest manufacturer of natural rubber gloves and surgical gloves. 

In its outlook, mangement noted that without a readable vaccine to COVID-19, much of the momentum of the Rubber Glove Sector will continue to be in trader’s focus. With COVID-19, Top Glove estimates that glove demand will grow by 20% per annum in 2020, 25% in 2021 and 15% post-COVID-19, noting that notwithstanding news of several promising vaccines in the pipeline, glove demand remains at a supernormal level, as gloves will still be required even when a vaccine becomes available. 



Malaysia EPF Becomes Substantial Shareholder of Riverstone Holdings 

On 17 September, the Employees Provident Fund Board of Malaysia become a substantial shareholder of Riverstone Holdings (SGX:AP4). The acquisition of 2 million shares on the open market with a consideration of S$6,576,000 was transacted at an average price of S$3.29 per share. This increased the Employees Provident Fund Board of Malaysia direct interest in Riverstone Holdings from 4.86 per cent to 5.13 per cent.

Back on 5 August, Riverstone Holdings posted a 119 per cent increase in net profit to RM137.5 million for its 1HFY20 (ended 30 June). Riverstone Holdings Executive Chairman and CEO Wong Teek Son noted that with the current industry tailwinds, the Group continues to focus on internal initiatives such as adopting automation to improve productivity and reduce its reliance on labor. Mr Wong added that the in-house R&D team continues to monitor industry trends closely and develop new products that will allow the Group to venture into untapped markets including the food processing, pharmaceutical and surgical glove segments.







This article is provided by SGX My Gateway.



SGX My Gateway

SGX's investor education portal with market, product and investment information and events. Sign up now at sgx.com/mygateway to receive our investment updates and economic calendar.

This document is not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Singapore Exchange Limited (“SGX”) to any registration or licensing requirement. This document is not an offer or solicitation to buy or sell, nor financial advice or recommendation for any investment product. This document is for general circulation only. It does not address the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a financial adviser regarding the suitability of any investment product before investing or adopting any investment strategies. Use of and/or reliance on this document is entirely at the reader’s own risk. Further information on this investment product may be obtained from www.sgx.com. Investment products are subject to significant investment risks, including the possible loss of the principal amount invested. Past performance of investment products is not indicative of their future performance. Examples provided are for illustrative purposes only. While each of SGX and its affiliates (collectively, the SGX Group Companies) have taken reasonable care to ensure the accuracy and completeness of the information provided, each of the SGX Group Companies disclaims any and all guarantees, representations and warranties, expressed or implied, in relation to this document and shall not be responsible or liable (whether under contract, tort (including negligence) or otherwise) for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind, including without limitation loss of profit, loss of reputation and loss of opportunity) suffered or incurred by any person due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such information, or arising from and/or in connection with this document. The information in this document may have been obtained via third party sources and which have not been independently verified by any SGX Group Company. No SGX Group Company endorses or shall be liable for the content of information provided by third parties. The SGX Group Companies may deal in investment products in the usual course of their business, and may be on the opposite side of any trades. SGX is an exempt financial adviser under the Financial Advisers Act (Cap. 110) of Singapore. The information in this document is subject to change without notice. This document shall not be reproduced, republished, uploaded, linked, posted, transmitted, adapted, copied, translated, modified, edited or otherwise displayed or distributed in any manner without SGX’s prior written consent.












Stock / REIT Search

Advertisement

Advertisement