Speaking on Switzer TV this week, Switzer Report co-founder Paul Rickard set out the brutal sector rotation that has reshaped the 2026 ASX, and the part of the market that has worn the worst of it.
Paul tells how the 2026 ASX story has split itself into two. Resources and energy have done the heavy lifting, with materials closing in on knocking financials off the spot of biggest sector on the local market. But underneath the index has been one of the harshest sectoral beltings Australian investors have seen in years.
Speaking on Switzer TV on Monday, Rickard set out the data: healthcare, once the country’s third-biggest sector, has slumped to sixth, and the value of the sector is down 31 per cent this year.
The fall
The pain has been spread across the big healthcare names that SMSF portfolios tend to hold.
“Healthcare once used to be the third biggest sector. It’s now down to about number six, minus 31 per cent. That’s CSL, Cochlear, ResMed.”
The single most dramatic move belongs to Pro Medicus.
“Pro Medicus is another one that’s had the market really beat it until the last couple of days,” Rickard said. “Before today’s rotation, down 18 per cent.”
There has been only modest offset. Chemist Warehouse, via Sigma Healthcare, has held some ground, but as Rickard put it: “Very hard to find too many winners in the healthcare sector.”
How we got here
Rickard’s framing for the fall came back to where Australian healthcare sits in the global AI build-out. While US tech has surged on the back of hyperscaler spending, chip demand and AI infrastructure, the kind of software-as-a-service exposure that defines a chunk of ASX healthcare has been hit by exactly the opposite fear.
Watch the full interview
The result has been a sector that has worn the AI threat without enjoying any of the upside that has lifted US tech.
Where the value sits now on the ASX
For Rickard, the silver lining of a 31 per cent sectoral fall is a familiar one: stocks he believes are now mispriced.
Two names he flagged on the show stand out. Pro Medicus, the medical imaging software company that has worn the worst of the sell-off, and Xero, the cloud accounting platform that has been caught up in the same SaaS derating.
“I still think the two companies I really like, Pro Medicus is up quite strongly today, and Xero,” Rickard said. “I still think there’s really good value there.”
Beyond the value question, Rickard also pointed to Goodman Group and NextDC as rate-sensitive companies that could benefit if the Reserve Bank’s hiking cycle is closer to ending than the market currently believes.
Where to from here?
Monday’s session was also the day Pro Medicus snapped sharply higher, taking back ground after months of weakness. Whether that was the start of a wider rotation back into the beaten-up health names, or a single-day reaction, was a question Rickard was not yet willing to answer. As he put it on the broader tech bounce that came on the same day: “One day rally is not going to make it.”
His own positioning has not been to chase. Despite the value he sees in pockets of the sector, Rickard is staying defensive, in part because the rate on offer in cash is making the bar for re-entering equities higher.
“You can get 5 per cent on a cash account somewhere,” he said. “It’s got to be a good return to want to go back and do equities to put more money in.”
“I’m not getting too defensive, but I’m not putting a lot more money into the market.”
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