Downgrading of global growth by IMF is not hurting all businesses

October 26, 2016

 

 

Another IMF downgrade would make this year’s growth rate the slowest since the 2009 financial crisis cast the world into recession.

 

Example: Earnings for Medtronic, a global medical device company, will face minimal impact from global slowdown

 

Medical device companies are expected to continue growing at close to twice world growth rates – ageing demographics are growing the healthcare sector faster

 

“The slowdown in the global economy will have relatively minimal impact on the outlook for Medtronic which is benefitting from the powerful megatrend in the growing demand for healthcare products and services and through innovation,” said Monik Kotecha, CIO, Insync Funds Management.

 

In a low global growth environment, Insync is still finding opportunities in the global healthcare sector.

 

Whilst global GDP is forecast to grow at around 2-3%, and there are growing concerns around the deleveraging necessary in China and the negative impact the global economy, Insync is finding opportunities in the global healthcare which they forecast to grow at a pace of 2x GDP over the coming years.

 

In the recent market volatility Insync added to its position in Medtronic, the leading medical device company in the world.

 

Medtronic is extremely well diversified across different products and geographies and has leadership positions in cardiology, general surgery, vascular, neurology, spine, and diabetes markets.

 

The company is forecast to generate free cash flow of over $7bn in 2016 and is committed to returning 50% of its free cash flow to shareholders in the form of growing dividends and buybacks.

 

The slowdown in the global economy will have a relatively minimal impact on the outlook for Medtronic which is benefitting from the powerful megatrend in the growing demand for healthcare products and services and through innovation.

 

The recent volatility in global markets provided Insync the opportunity to increase it’s holding in Medtronic.

 

 

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