The Hang Seng Composite Industry Index – Healthcare (HSHCI) tracks the performance of healthcare-related companies listed on the Hong Kong Stock Exchange.
As part of the broader Hang Seng Composite Index (HSCI), the sector-specific index captures the performance of firms engaged in areas such as pharmaceuticals, biotechnology, medical devices, healthcare services, and related life sciences.
Hang Seng Composite Index
Healthcare stocks are generally considered defensive investments, as demand for medical services and treatments tends to remain robust regardless of economic cycles. However, as you will see further down the page, the index hasn't performed very well of late. The index includes names such as Kangji Medical, Remegen, and JD Health, which provide investors with exposure to a resilient sector that benefits from consistent demand for its products and services.
The sector-specific index was launched in August 2015 and currently holds 76 stocks.
Hang Seng Composite Industry Index – Healthcare Performance
Barring a few rallies lasting a matter of weeks/months, the index has mostly declined since 2021, hitting all-time lows in 2024. The decline in the sector has been in part due to the region's aging population.
| Period | Total Return |
|---|---|
| 1-Year Return | +3.71% |
| 3-Year Return | -42.02% |
| 5-Year Return | -50.48% |
| 10-Year Return | – |
Hang Seng Composite Industry Index – Healthcare Top 10 Companies
The index is reviewed half yearly.
| Company | Weighting |
|---|---|
| Beigene | 9.32% |
| Wuxi Bio | 8.59% |
| Akeso | 5.16% |
| JD Health | 4.11% |
| Giant Biogene | 3.02% |
| Zai Lab | 2.72% |
| Hansoh Pharma | 2.68% |
| Wuxi Apptec | 2.58% |
| United Lab | 1.62% |
| SH Pharma | 1.21% |
Hong Kong/China Healthcare Forecast
The Bull Argument: It's very hard to ignore the index's decline over the years. however, supporters of the healthcare sector in the region may see this as a benefit due to robust, long-term demand. Analysts and investors positive onb the sector may also highlight the rapid advances in medical technology. Many believe that ongoing innovation in biotechnology and medical devices will propel growth in this sector. Furthermore, expanding healthcare access and increasing global health awareness are expected to fuel demand for pharmaceutical and diagnostic services in the region. Government support and favourable regulatory environments in key markets can also serve as catalysts for growth.
The Bear Argument: However, the aging population is seen mostly as a negative for the sector. While there is increased demand for healthcare services, it simultaneously means there is a shortage of medical professionals, particularly doctors and nurses, which results in long wait times and strained public healthcare systems. Further challenges for the sector in the region include rising healthcare costs, unequal access to quality care in certain regions, and regulatory uncertainties in the private healthcare sector. Another potential headwind to the sector is competitive pressures from generic drug manufacturers. While healthcare is generally resilient, any significant shifts in policy or adverse macroeconomic conditions could weigh on the performance of the sector.
Our View: The Hang Seng Composite Industry Index – Healthcare offers a targeted means of tracking a sector that has faced challenges in the region in recent years. While the sector, in general, may not deliver explosive growth like more volatile sectors, many see the defensive attributes as positive. However, as of now, healthcare stocks are not performing well in the region, with the current headwinds outweighing the tailwinds.
Who Should Invest in Hong Kong/Chinese Healthcare Stocks?
For those interested in investing in Hong Kong/Chinese healthcare stocks, ETFs such as the Global X China MedTech ETF, KraneShares MSCI All China Health Care Index, and the Da Cheng Hang Seng Healthcare Index ETF track many of the companies in the Hang Seng Composite Industry Index – Healthcare index. In addition, in 2024, the Hang Seng announced five ETFs tracking Hang Seng Healthcare-related indexes had been approved for issuance in Mainland China. The ETFs are listed here.
Overall, the sector is particularly suited to investors with the following profiles:
- Bargain Hunters: With the stocks in the sector experiencing a downturn, investors looking for a potential turnaround may see it as an attractive option. However, it is vital to conduct thorough research.
- Income-focused Investors: With many companies in the sector offering consistent dividend payouts, it can appeal to those looking to generate regular income.
Long-term Investors: Given the enduring demand for healthcare services and products, the ETFs may be ideal for those with a long-term investment horizon, especially given the decline.
