Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Korean growth stocks climb after rate cut
Visitors are seen at a Samsung Biologics booth at BIO International Convention 2024 in San Diego, Calif. in June. Yonhap
By Yi Whan-woo
The prices of growth stocks in the health and biotechnology sectors are on the rise in the Korean market following the Bank of Korea's (BOK) rate cut last week, along with growth stocks in other industries.
Growth stocks share a common characteristic: the expansion of their respective industries necessitates substantial investments, often financed through loans obtained from banks.
Under the circumstances, multiple growth stocks have gained ground following the BOK's rate cut, fueled by optimism that companies can borrow money from banks at lower interest rates.
The BOK reduced its benchmark interest rate by 25 basis points to 3.25 percent on Oct. 11, ending more than three years of monetary tightening to curb inflation.
Samsung Biologics, Samsung Group's biotech arm, fluctuated in the range between upper 990,000 won and lower 1 million won ($730.57) on the benchmark KOSPI before Oct. 11 but stayed above 1 million won afterward.
"The upward trajectory of biotechnology stock is noteworthy as the KOSPI is in a downward trend overall," Shinhan Securities analyst Lee Jae-won said.
SK Pharmaceuticals, an SK Group affiliate developing innovative, next-generation drugs, was traded at 100,000 won range before Oct. 11, but it climbed above 110,000 won and then again above 120,000 won afterward.
Also a KOPSI-listed pharmaceutical, Yuhan Corp., renewed its annual high twice after the BOK's rate cut — 161,300 won on Oct. 11 and 163,700 won on Tuesday — although it slid to the 150,000 won from Wednesday.
Mirae Asset Securities analyst Kim Seung-min hinted that the growth stocks are likely to gain momentum further, saying, "The corresponding companies are expected to report strong profits for the third quarter."
Regarding Samsung Biologics, it additionally launched the high-concentration drug formulation development platform Monday.
The platform, S-HiCon, is in line with its expansion on formulation development capabilities globally and brings the country's total number of technological platforms to nine.
Industry sources speculated unlisted companies in biotechnology, pharmaceutical and health care sectors are increasingly anticipated to go for initial public offering (IPO).
The sources noted 16 firms in these sectors already won preliminary approval for IPO this year, up from 12 in entire 2023.