Here’s the chink in the armor of Singapore's supposedly sturdy healthcare stocks

Expansion to overseas markets aren’t risk-free.

Singapore’s healthcare stocks have outperformed the STI index for a couple of years now, but the stocks aren’t as impenetrable as one might think.

According to a report by KGI Fraser, among the risks faced by Singapore healthcare stocks include the appreciation of the SGD against regional currencies, notably the Indonesian Rupiah, may affect medical tourism.

“Indonesian market makes up around ~60% of medical tourism revenues,” KGI Fraser said.

Meanwhile, KGI Fraser added that delays in overseas expansion could also be a bane for healthcare stocks due to regulatory hurdles.

However, analysts are optimistic that the stocks would continue to outperform the general market, as the sector banks on long-term trends.

“The healthcare sector is riding on structural changes in Singapore’s population age profile. Our aging population is expected to require more healthcare services. Furthermore, medical tourism is recovering as regional currencies stabilize and as income levels continue to rise,” KGI Fraser noted