Investing in stocks and assets with high pricing power and long-term growth potential has traditionally been a good way to capture gains and stay ahead in an inflationary environment.
To navigate the current inflationary headwinds, analysts recommend investing in healthcare and high-dividend stocks with yields over 5% in the past 12 months as they are sectors with high growth prospects and sturdy performance amid rising inflation.
HEALTH-CONSCIOUS
Siriporn Suwannagarn, senior managing director and financial advisory head of Kasikornbank (KBank), said the pandemic has led to heightened health awareness and spurred the growth of medical innovations as people see them as keys to healthier, longer lives.
Funds concentrated in healthcare stocks can help diversify portfolios in the sector's subdivisions, she said.
KBank Private Banking recommends K-GHEALTH, which is a fund focusing on medical and healthcare stocks in four main groups: pharmaceuticals, biotechnology, medical technology and healthcare services.
The bank said the fund supports long-term growth in medical innovations by investing in pharmaceutical companies that are developing cutting-edge products such as precision medicine and insulin pills.
The fund also focuses on companies with drugs or medical technology that can effectively diagnose and treat diseases such as cancer and heart disease at the genetic level, such as a drug that prevents heart failure by entering and strengthening the heart muscles, utilising surgery robots and artificial intelligence (AI) that helps doctors process digitised medical data for diagnosis.
In addition, K-GHEALTH invests in healthcare services that aim to enhance patients' access to affordable care, such as insurance systems with a large network of companies that makes it easier for patients to access treatment.
As a fund with investments in many industries, KBank Private Banking said K-GHEALTH fund is a good investment opportunity that should benefit from heightened health concerns in the long term and will continue to perform even amid intense market volatility and high inflation.
Ms Siriporn said healthcare has many subdivisions and stocks with good fundamentals and laggard prices, allowing high potential for growth.
She said investing in healthcare stocks will remain attractive and provide investors an opportunity to gain long-term returns.
TECH TRENDS
Dr Manop Pitakpakorn, head of the Research Center for Excellence in Precision Medicine at the Faculty of Medicine, Siriraj Hospital, said the pandemic accelerated advancements in medical technology and significantly improved the efficiency of the entire healthcare supply chain as it has driven firms in the healthcare industry to compete in developing technologies to fight the virus.
The pandemic was also a catalyst for mass digitalisation and technology adoption in every industry including healthcare, he said.
People increasingly recognise the importance of medical technology and see it as a key tool for the development and sustainability of well-being, said Dr Manop.
He said medical innovations that will become future trends include telemedicine, AI, machine learning and big data, Internet of Things (IoT), augmented reality (AR) and virtual reality (VR), medical automation and robotics, 3D bioprinting, gene editing with CRISPR technology, predictive and preventive medicine, and precision medicine.
Dr Manop said telemedicine has been increasingly adopted by health personnel during the pandemic to provide services from a distance.
Medical data can be forwarded from devices such as smart watches that provide doctors with patients' data for diagnosis and treatment.
In 2020, the market value of the telemedicine industry stood at US$7.9 billion, about 27 trillion baht, and is expected to grow to $3.96 trillion or 135 trillion baht in 2027.
He said as medical data is more digitised, doctors can use AI to help screen, diagnose and make better treatment decisions.
For example, AI can be used to diagnose patients with coronary artery disease and cerebral vasoconstriction, as it shortens the diagnosis time from 15-30 minutes to only 3 minutes, said Dr Manop.
More doctors and health personnel are expected to use IoT, AR and VR devices, wearable devices and sensors to treat and care for patients and perform on-site treatment without having to physically be at the site, he said.
Examples include arm-mounted glucose monitoring sensors that measure wearers' blood sugar levels 24 hours a day, or drug-mounted sensors that let doctors and nurses know if their patients are taking their medication on time.
In addition to these devices, doctors will use more robots to perform surgery on small and delicate organs such as hands, ears, eyes or brains to reduce human error and speed up operations, said Dr Manop.
3D bioprinting and 3D printing technology will also play a huge part in treatment as it can be applied to organ transplants. The market value for this segment is expected to reach $1.8 billion, about 62 billion baht, in 2027, he said.
Gene editing with CRISPR technology is another innovative medical option that helps correct abnormalities in patients, such as high blood cholesterol levels from gene abnormalities that have no drug treatment.
In addition to treatment, predictive and preventive medicine from genetic transcription is also becoming much faster and cheaper, making it likely it will infiltrate all sectors of healthcare in the near future, said Dr Manop.
Genetic transcription can help doctors predict the likelihood of diseases for each newborn and formulate a plan to prevent such diseases, which will help reduce healthcare costs in the long term, he said.
Genomic and precision medicine is another medical technology that employs genetic transcription to pinpoint the sources of anomalies.
Dr Manop said all these technologies are helping doctors deliver the best treatment results and will benefit from mass adoption in the future.
Thomas Bradley-Flannagan, investment specialist from JP Morgan Asset Management International Equity Group, said healthcare stocks continue to generate good returns for investors, even in times of high inflation.
However, he said not all healthcare segments perform well. Mr Bradley-Flannagan recommends overweighting investments in biotech stocks whose share prices have dropped, as well as focusing on companies with outstanding innovation, performance and long-term growth opportunities.
He said for healthcare providers, investors should focus more on health insurance than hospitals, while maintaining weight in pharmaceutical stocks as they are comparatively stable and do not fluctuate according to the economic situation.
Medical technology stocks will be relatively more volatile as they are mostly startups that are overpriced because of investment surges, said Mr Bradley-Flannagan.
STABLE DIVIDENDS
Dividend stocks in inflation-resistant sectors such as energy is another good choice to offset the negative impact from rising consumer prices.
An analysis by Siam Commercial Bank (SCB) suggests choosing stocks that offer dividend yields that are above inflation levels and offer higher returns than deposit accounts or government bonds, meaning 5% or higher.
SCB also urges investors to focus on stocks with a consistent healthy dividend payment history and strong financial position with positive cash flow, as well as good trading liquidity.
The bank said dividend yield levels reflect the ability of the company to generate profits and pay dividends.
In addition, investors should look at the companies' records of return on equity (ROE) to find those with the best performance.
ROE is a measure of profitability calculated by dividing net income by shareholders' equity. High numbers reflect a company's capacity to make profit and suggest it can pay healthy dividends in the future.
Property and real estate are other assets that offer higher returns than inflation as they usually don't fluctuate along with volatility in the stock market.
SCB recommends investing in real estate investment trusts with consistently high returns to reduce risks.
