Investors should jump on board Asia’s new industry clusters, according to UBS, the Swiss bank. It defines an industry cluster as a group of firms that operate in the same region and the same industry, serving global needs–think the Silicon Valley in California or the semiconductor industry in Taiwan.
UBS believes that spotting an industry cluster while it’s still in its growing stages, and following the top firms in it, can allow you to take early stakes in emerging global leaders. The bank sees a number of emerging industry clusters in Asia, including medical tourism in Singapore and Thailand, auto parts in India, and water technology in China.
The case for the medical tourism cluster is particularly easy to understand. Singapore and Thailand are both popular tourist destinations, with high-quality medical facilities accredited by international agencies.
These Asian hospitals have a huge advantage over their U.S. counterparts. A heart valve replacement, for instance, will cost you US$150,000 in the United States, but only US$10,000 to US$12,500 in Thailand or Singapore. The combination of aging North American boomers, long waiting lists for medical care in Canada and the United States, and pinched public-health budgets should provide these facilities with a steady stream of international patients.
UBS lists 17 companies listed on the Singapore and Thailand stock exchanges with US$10 million or more in market cap and direct exposure to this health care cluster. They include Raffles Medical, which operates medical and dental clinics, and Bangkok Dusit, which runs Bangkok General Hospital. While these specific firms may not be tomorrow’s leaders, they are evidence that the industry is growing and attracting local investors.
Freelance business journalist Ian McGugan blogs for the Financial Post