An escalating trade war with China elevates a number of risk factors, but also creates pockets of overlooked opportunity for those with the appetite. Advisors and investors looking for contrarian opportunities in 2025 need look no further than China’s healthcare sector and the KraneShares MSCI China All Shares Healthcare 10/40 Index ETF (KURE ).
China, the second largest global economy, is also home to the world’s second largest healthcare market. With demand only set to increase due to China’s aging population, the sector stands to benefit from a number of tailwinds. KraneShares noted that by 2050, those aged 60 and over will more than double their current numbers in China. What’s more, the number of China citizens over 60 will comprise more than the entirety of the U.S. population by 2050.
A growing middle class, buoyed by ongoing policy stimulus and support in China, could also drive more persistent demand. Increases in income and ongoing movement towards urban centers by China’s population create better access to healthcare. This translates to higher rates of diagnosis and treatment for a wide array of ailments, including cancer.
Notably, China’s healthcare sector may offer more insulation from the tariff war currently happening between the U.S. and China than other industries and sectors. Furthermore, these companies traded at lower multiples (21x) than the broader global healthcare sector (29x) as of December 31, 2024. KraneShares measured worldwide healthcare using the S&P Global 1200 Health Care Index. It makes China’s healthcare sector attractively positioned for investors seeking overlooked opportunities.
A 2025 Contrarian China Opportunity for Investors
KURE offers investors access to China’s healthcare sector. The fund seeks to track the MSCI All China Health Care 10/40 Index, a free float-adjusted market cap-weighted index. It currently trades above both its 50-day simple moving average (SMA) and its 200-day SMA. This puts the fund solidly in buy territory for trend followers and contrarian investors alike.
The fund includes companies listed in Mainland China, Hong Kong, and the U.S. and invests across market caps. These include biotech companies, patent and generic pharmaceutical companies, hospital administration, medical equipment producers, healthcare IT, and more.
Current top holdings in the fund include BeiGene and Shenzhen Mindray. The former is a multinational company researching and developing cancer treatment drugs, while the latter manufactures medical equipment internationally. Beigene generated five-year average revenue growth of 85.17% for the period ending December 2024. Meanwhile, Mindray doubled its annual revenue between 2019 and the end of 2023, according to KraneShares data.
The “10/40” index applies limits to the weights and holdings, such that the weight of each group entity in the index is capped at 10%. Meanwhile, the cumulative weight of all group entities with a weight greater than 5% does not exceed 40% of the entire index.
KURE has an expense ratio of 0.65%, with fee waivers that expire in August 2025.
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