Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Hopes for COVID-19 vaccine boost stock markets
By Anna J. Park
Aviation, travel and duty free stocks rise amid jolted expectations for vaccine development.
By Anna J. Park
Upon news that the COVID-19 vaccine being developed by Pfizer and BioNTech has shown a rate of effectiveness of over 90 percent in phase 3 trials, hopes that the pandemic situation could improve propelled the local stock markets on Tuesday.
Just as the news stoked the U.S.' Dow Jones Index by 2.95 percent on Monday's market closing, demand for travel and aviation in particular pushed related stock prices up high. The possibility of the vaccine's success made investors on the Korean stock markets take long positions on pandemic-crushed sectors like aviation, tourism and retail shopping. Stocks that have enjoyed gains from the pandemic, such as IT, biopharmaceuticals and work-from-home-related stocks, suffered falls Tuesday.
Korea's benchmark KOSPI ended at 2,452.83 points on Tuesday's closing, up by 0.23 percent from the previous session. Retail investors returned to a net buying position, with net purchasing at 187 billion won ($169 million) after the past few days of net selling. Foreign investors also net purchased 156 billion won worth of stocks, while institutional investors net sold about 328.3 billion won.
Aviation stocks enjoyed the most gains on Tuesday's trading session, with Korean Air's stock price rising by 11.24 percent from 21,800 to 24,250 won. Jin Air and Jeju Air also rose by 11.54 percent and 11.11 percent, respectively. Stocks in Asiana Airlines, which is going through a capital reduction, also increased by 0.86 percent.
The pandemic-battered tourism sector also saw a big jump on Tuesday's trading session, with Hana Tour stocks rising by 9.17 percent, Mode Tour by 6.90 percent and Yellow Balloon Tour by 6.81 percent. Accommodation and lodging companies like Hotel Shilla and Paradise Hotel also rose by 5.81 percent and 6.90 percent, respectively, while duty free businesses and department store stocks in Shinsegae jumped by 5.56 percent and Hyundai Department Store increased by 4.88 percent.
“Investors' preference for risky assets has expanded in the financial markets with the positive results from Pfizer's phase 3 trials, as the results showed them hope for a return to normalcy in 2021,” analyst Seo Sang-young from Kiwoom Securities explained.
Yet market watchers are still reluctant to say whether the current positive soaring momentum will expand or not, as they expect various sectors will yield different results from now on.
“It seems that the mood on the stock markets has begun to change with travel and aviation stocks soaring while tech-based stocks ― which have propelled the market's rally this year ― are losing further momentum. In addition, since the market's excitement about the vaccine has now been fully pre-reflected, the markets will react more sensitively to any future news about vaccine development failures,” Park Soo-min, an analyst at Shinyoung Securities, said during a phone interview.
“As interest rates of the U.S. have increased at the vaccine's development news, banking and insurance stocks will also see a further increase, as the year-end dividend paying time is also approaching,” the analyst said, adding that companies' fundamentals would ultimately determine the stock markets' performances in the end.