1 Opportunities From Emerging Healthcare Markets KraneShares Emerging Market Healthcare Index ETF (Ticker: KMED) KMED 6/30/2020 info @ kraneshares.com
2 Introduction to KraneShares About KraneShares Krane Funds Advisors, LLC is the investment manager for KraneShares ETFs. Our suite of China focused ETFs provides investors with solutions to capture China’s importance as an essential element of a well-designed investment portfolio. We strive to provide innovative, first to market strategies that have been developed based on our strong partnerships and our deep knowledge of investing. We help investors stay current on global market trends and aim to provide meaningful diversification. Krane Funds Advisors, LLC is majority owned by China International Capital Corporation (CICC).
3 In emerging markets, rapid urbanization and rising income are fueling growth in the demand for healthcare services and treatments. prepaid private, and out-of-pocket health spending in 184 countries”, The Lancet , Volume 389 , Issue 10083 , 2005 – 2030. Retrieved Dieleman, Joseph L et al., “Future and potential spending on health 2015–40: development assistance for health, and government, 1. Exposure to companies that benefit from EM demographic shifts. Access to emerging market innovators in healthcare and pharmaceutical research. Specifically: pharmaceuticals, biotechnology, healthcare administration services, and medical equipment. Exposure to the Emerging Market (EM) healthcare industry with a low correlation to US healthcare equities. KMED Features: 2030 Plan” to meet the growing demand for healthcare. Emerging market governments are enacting policies such as India’s “National Health Protection Mission” and China’s “Healthy China demand for healthcare services. KMED Cases of non-communicable diseases (NCDs) such as diabetes and cancer are rising steadily in emerging market countries, driving 6/30/2020. Healthcare Index. The index seeks to track the equity market performance of companies engaged in the health care sector in various KraneShares Emerging Market Healthcare Index ETF Investment Strategy: KMED seeks to provide investment results that, before fees and expenses, track the performance of the Solactive Emerging Markets emerging markets. The issuers include small-cap, mid-cap, and large-cap companies involved in hospital management, healthcare management, pharmaceutical manufacturing, and biotechnology, among other sub-industries. Emerging Market Healthcare Sector Highlights: By 2040, emerging market countries on average are projected to increase healthcare spending as a percent of GDP by 24.4% compared to just 9.8% in developed markets over the same time period 1 . • • • • • • •
4 The populations of emerging market countries are growing and aging over 588 million people aged 65 or more 1 . By 2030, China will have 100 million people aged 65 or older, bigger than Germany's total population 2 . This would cause an increasing demand for domestic healthcare services as life expectancy continues to rise. 1. United Nations, “World Population Prospects: The 2017 revision”. Retrieved 6/30/2020. 2. McKinsey, “”Investors are plowing billions of dollars into China’s rapidly growing healthcare market.“ April 2018. Retrieved 6/30/2020. 2015-2050 2 Projected Total Population Size for Emerging Market Countries • The UN predicts that, by 2050, world population will exceed 9.7 billion people 1 with emerging market countries accounting for over one third of total population and having • Projected Change in 65+ Population in EM Countries from 2015-2050 1 3.5 40% Population Aged 65 or Older (% of total) 35% 3.4 Total Population (Billions) 30% 25% 3.3 20% 15% 3.2 10% 5% 3.1 0% South Africa India Malaysia Brazil China Thailand South Korea 3.0 2015 2050 2015 2020 2025 2030 2035 2040 2045 2050
5 Urban Population in Emerging Market Countries 2003-2019 1 0 5000 10000 15000 20000 25000 30000 35000 GDP per Capita in Emerging Market Countries 2003-2019 1 McKinsey Global Institute, “Urban World: The Global Consumers to Watch,” 2016. Retrieved on 6/30/2020. 2. The McKinsey Global Institute estimates that 91% of global consumption will come from cities between 2015 and 2030, and the global distribution of consumption wealth In EM countries, the total population living in urban areas has increased by over 337 million people in just 10 years 1 Asian countries like China, Thailand and Malaysia are experiencing particularly rapid urbanization rates 1 Data from The World Bank as of 12/31/2019. Retrieved on 6/30/2020. Urbanization in emerging markets has been accompanied by a sharp rise in average GDP per capita which more than doubled from 2004 to 2017 1 is tilting towards emerging markets. Consumers living in emerging market cities are predicted to contribute 56% (or $14.1 trillion) to global consumption growth, compared to 35% (or $8.8 trillion) for consumers in developed market cities from 2015-2030 2 . 1. Rapid urbanization and rising income look to increase consumption in emerging markets • • • • 100 GDP per Capita (current US$) 90 Urban Population (% of total) 80 70 60 50 40 30 20 10 0 2003 2010 2019 2003 2010 2019 India China Thailand Brazil South Africa Malaysia South Korea India Thailand China South Africa Malaysia South Korea Brazil
6 400 107 144 192 310 460 669 856 0 100 200 300 500 45,000 600 700 800 900 1960 1970 1980 1990 2000 2010 2019 Population in Millions Per Capita Disposable Income of Urban Households in China 3 40,000 As China’s population moves to cities and wages increase, healthcare is becoming a greater focus 2. As average household income and urbanization rates have risen, Chinese citizens have greater access to healthcare knowledge and have a greater ability to pay for medical- related costs. However, rising incomes and urbanization have given rise to China’s current obesity problem as more citizens adopt western eating habits. From 2004 to 2014, China’s obesity rate tripled. Today, about 30% of Chinese adults, approximately 320 million people, are overweight, while about 14% of adults are obese 1 . Additionally, instances of cancer in China are rising, with 4.3 million new cancer cases in 2018 alone 2 . In 2016, the government responded to growing healthcare concerns by launching the “Healthy China 2030 Plan”, which is a national initiative that promotes diet, exercise, and access to healthcare services. 35,000 Radu, Sintia. “China’s Obesity Rate Triples in 10 Years,” US News & World Report. October 28, 2019. Retrieved 6/30/2020. 1. World Health Organization’s Global Cancer Observatory, “China Population Fact Sheet”. Last updated May 2019. Retrieved 6/30/2020. 3. Data from Bloomberg as of 12/31/2019. Retrieved 6/30/2020. 0 5,000 10,000 15,000 20,000 25,000 30,000 China Urban Population 3 • • • • •
7 Total Healthcare Expenditure per Capita (US$ 1,500 2,000 2,500 2000 2010 2017 mil) 500 Total Healthcare Expenditure per Capita in EM ($US mil) 4 India China Thailand Malaysia South Africa Brazil 1,000 0 Health care spending is on the rise in other emerging market economies expenditures on healthcare could rise from US $8 trillion in 2018 to over $18 trillion in 2040 4 . Urbanization is placing many in emerging market countries within reach of modern healthcare services, and aging populations are fueling growth in the demand for healthcare services and treatments 1 . Moreover, due to urbanization and resulting lifestyle changes, diagnoses of non-communicable diseases (NCDs) such as diabetes and cancer are rising steadily in emerging market countries, presenting a growth opportunity for innovators in the healthcare space 1 . 4. World Health Organization, Global Health Expenditure Database as of 12/31/2017, retrieved 6/30/2020 Global health care spending is projected to increase at an annual rate of 5% from 2019-2023 2 , up 2.7% from 2014-2018. Recent estimates suggest that global 1. UBS, “Longer Term Investments: Emerging Market Healthcare” 3/28/2017. 2. Deloitte, “2020 Global Health Care Outlook: Laying a foundation for the future”, Retrieved 6/30/2020. 3. Dieleman, Joseph L et al., “Future and potential spending on health 2015–40: development assistance for health, and government, prepaid private, and out-of-pocket health spending in 184 countries”, The Lancet , Volume 389 , Issue 10083 , 2005 - 2030 South Korea • • •
Recommend
More recommend
