With health-related concerns being brought to the forefront during the Covid-19 pandemic, investors could reasonably expect healthcare stocks to be performing well. However, I would like to highlight that not all healthcare stocks are doing well and it is important to select the right area of healthcare. In the chart below, SGX-listed hospital/clinic stocks have had an anaemic performance relative to expectations; most are trading flat or below their prices at the start of the year. In this post, I will address the initial expectations of outperformance and then explain why such stocks have failed to live up to expectations.
Expected resilience of hospital/clinic stocks
Hospital or clinic related stocks are stocks that operate/own hospitals and typically benefit from a higher patient load or utilisation of their healthcare services. Demand for healthcare services tends to be inelastic and relatively recession-proof as the need to...
