Test / Remain careful with the high value healthcare sector

By Market Matters 29 March 19

Remain careful with the high value healthcare sector

The Australian Healthcare Sector has been a go to vehicle for many investors with the growing local population being a significant tailwind. Also, many players in the Australian market have a large portion of their earnings in $US which has also assisted profitability with the Aussie Battler ($A) falling over 35% since 2011 e.g. major players like CSL Ltd (CSL), Cochlear (COH) and ResMed (RMD) all earn a significant portion of their revenue in $US.

At MM we are now bullish the $A after turning bearish around 8-years ago, if we are correct the tailwind for our healthcare sector will eventually become a headwind. It’s important to remember that healthcare stocks have outperformed for almost a decade, if the trend is finally unravelling it will last a lot longer than a few months before its complete.

MM now believes the healthcare sector will underperform the ASX200 through 2019 / 2020.

ASX200 v Healthcare Index Chart

CSL Ltd (CSL) Chart