Here’s one: China’s stock market is one of the best performers in the world this year.
This is a bit surprising since the coronavirus was first discovered in China. The first cases of COVID-19 were diagnosed there. And parts of that nation were the first in the world to shut down to try to control the virus.
On the other hand, China represents several major opportunities. Some people are uncomfortable with it, but it is completely true.
One of these may be another surprise. Although there is no treatment or vaccine against COVID-19 yet, China’s health and biotechnological stocks have been excellent in the latest global bear market.
The government is devoting massive resources to growing China’s biotechnology industry, and big winners are already emerging …
If you’re a regular MoneyWire reader, you know how bullish I am on US biotech stocks … going back to last year when I declared the 2020 Biotech year.
We are on the right track. The Nasdaq Biotech Index broke to new five-year highs this week, and the VanEck Vectors Biotech ETF (NASDAQ: BBH) hit a new historic high just Monday.
I still believe that the potential of American biotechnological stocks is unique. But … so is the opportunity in biotechnology and healthcare stocks in China. It would be crazy to look past that.
At present, this is an opportunity with short-term relative strength – which is large in a down market – and enormous long-term potential.
The chart below shows the results made so far for two Chinese biotechnology stocks trading in the US, two healthcare ETFs and the S&P 500. Of the five, the only loser is the S&P 500 (-11%).
Both ETFs increased during the year, and the two stocks – Zai Lab (NASDAQ: ZLAB) and WuXi Biologics (2269.HK) – are crushing the market.
Last year, I compiled a comprehensive report for my early stage investor subscribers on the ridiculously large upward potential of Chinese biotechnology stocks over the next decade. The spread of the pandemic has only strengthened my fall for the sector.
Here’s the big story in a nutshell: The Chinese government stated that it wanted the country’s biotechnology sector to account for 4% of the total economy by 2020. Based on the figures at the time, it meant an explosion from an industry of $ 5.4 billion. to $ 627 billion industry – or 116X growth – in just two years.
I said at the time that it might not happen that fast, and I doubt it will happen. But I also said … who cares? If you could get 116X growth in five years, you would want it, right?
The big money really wants in.
Amgen (NASDAQ: AMGN), the largest biotechnology of all, announced a major partnership last fall with BeiGene (NASDAQ: BGNE) to sell drugs in China and co-develop 20 new cancer drugs. Major pharmaceutical companies such as Pfizer (NYSE: PFE), Novartis (NYSE: NVS) and Merck (NYSE: MRK) – all with market ceilings of over $ 200 billion – have partnerships in China, plan to expand there or both.
I recommended Zai Lab to my early-stage Investor readers in April last year because of its focus on cancer – China has more cancer patients than any other country in the world – and its impressive pipeline of potential new drugs. The share has risen more than 50% here in 2020, which says a lot given the broader market conditions, and it is now 120% higher than where I recommended it. It is a poster stock for this massive trend.
I realize that some investors will never buy Chinese stocks, especially biotechnology. I understand. They are two categories that have been volatile in the past and I am not here to judge anyone’s vision or comfort level. But I’m here to point out to investors what I think are the best investment opportunities for your money. And biotechnology and healthcare stocks in China must be at the top of the list.
My good friend Steve Sjuggerud also wrote about this possibility in a daily e-mail this week and one of his current newsletters. Steve is one of the smartest guys I know when it comes to investing in China – he’s been there many times – and knowing he’s on board makes me even more confident about the money to be made here.
A key in this case – and indeed to any successful investment – is timing. We are still early in the Chinese biotechnology trend for hyper-growth, and that makes upward potential even more massive for those who are investing now.
Matthew McCall left Wall Street to actually help investors – by getting them into the world’s biggest, most revolutionary trends FOR anyone else. The power of being “first” gave Matt readers the chance to bank + 2,438% in Stamps.com (STMP), + 1,523% in Ulta Beauty (ULTA) and + 1,044% in Tesla (TSLA), just to name a few . Click here to see what Matt has up his sleeve now. Matt does not directly own the above-mentioned securities.