Do not go gentle into that good night, old age should burn and rave at close of day; Rage, rage against the dying of the light, though wise men at their end know dark is right, because their words had forked no lightning they, do not go gentle into that good night.
Why is Kosdaq market in panic mode?
By Jhoo Dong-chan
By Jhoo Dong-chan
Investors' sell-off rush crashed the secondary Kosdaq by over 7 percent to below the 570-point level Monday. This was the sharpest drop in eight years.
Global uncertainties raised by various unfavorable external factors, including the Korea-Japan and U.S.-China trade rows, dragged down the nation's stock market, but experts said a series of clinical failures reported by major Kosdaq-listed bio firms was the biggest reason behind Kosdaq's “Black Monday.”
According to the Korea Exchange (KRX), the Kosdaq dropped 45.91 points, or 7.46 percent, to 569.79 Monday. In a bid to cool down the market's rapid fluctuations, the KRX even issued a five-minute sidecar on the Kosdaq for the first time since 2016. The index further dropped by 3.21 percent to end at 551.50 Tuesday.
Biotech firm SillaJen's announcement about the failure of its lead pipeline candidate Pexa-Vex in a Phase III trial was a start.
Kosdaq-leading Celltrion Healthcare immediately suffered a 9.5 percent fall in its stock price shortly after the announcement. Share prices of other bio stocks such as Helixmith and Medytox also crashed 17.36 percent and 19.07 percent, respectively, on the day session.
Domestic bio firms' downtrend wasn't the first of its kind since the Seoul stock operator, last month, decided to suspend trading shares of Kolon TissueGene. The KRX said Kolon TissueGene submitted false data to the regulator when the company was seeking preliminary review for listing on the secondary market in June 2017.
“It seems investors have completely lost their confidence in the nation's bio stocks,” said a major securities firm analyst who asked not to be named.
“Some biotech firms have demonstrated remarkable developments in their new drug trials, but it seems they are generally too hasty in showing off to boost their stock prices. It has been just too frequent since the Hanmi Pharmaceutical to SillaJen.”
Analysts now claim firms producing materials related to semiconductors and display panels will replace these biotech firms' position in the secondary Kosdaq.
Reflecting growing domestic expectations after Tokyo's decision to curb its exports on three major resource materials for the manufacture of semiconductors and screens, SK Materials has become the seventh-largest stock in the Kosdaq with a 1.85 trillion won ($1.52 billion) market capitalization.
“Firms producing necessary materials for semiconductors and screen panels are receiving mounting attention from investors following the Korea-Japan trade row,” Hana Financial Investment researcher Kim Kyung-min said.
KTB Securities researcher Park Seok-hyun said it will take time for the Kosdaq to recover.
“I believe there is still room for further fall depending on external factors,” Park said.
“This isn't the time to purchase in low prices.”