Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Fears of COVID-19 resurgence push up bio stocks despite KOSPI's fall
A person prepares to get a COVID-19 test in front of a public health center in Seoul, Tuesday. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Shares of bio and pharmaceutical companies have made a solid recovery amid fears of a resurgence of the coronavirus, despite an overall worsening of stock market sentiment here.
The first half of this year was a nightmarish period for players in the biotechnology and pharmaceutical industries, as their stock values plummeted as the intensity of the COVID-19 pandemic waned.
Together with reduced public vigilance and government preparation for new variants, escalating fears of a global recession have also resulted in a steep fall in major growth stocks. Bio stocks are representative growth stocks, whose performance remains robust during stock market boom cycles. But their valuation plunges during periods of global financial uncertainty sparked by interest rate hikes.
Shares of SK Bioscience reached a record high of around 360,000 won per share in August 2021, but the value sharply dropped to below 100,000 won late last month. But the company achieved an outstanding rebound this month on growing hopes for its sales growth driven by an increase in demand for COVID-19 vaccines. SK Bioscience shares soared by more than 45 percent only in July.
“The benchmark KOSPI's pharmaceutical sector rose by 6.1 percent throughout last week, which outperforms the 0.1-percent increase of the main bourse during the same period,” Hanwha Investment & Securities analyst Kim Hyung-soo said. “SK Bioscience achieved an eye-catching stock rally of 38 percent last week on expectations for its recently-approved COVID-19 vaccine supply, amid the surge in the number of new daily infection cases here.”
According to data from the Korea Disease Control and Prevention Agency, the number of daily new infection cases reached 37,360 on Monday. This figure is the highest seen since May 11, when daily infections reached 43,908.
Bio stocks have regained investors' attention particularly due to the rapid rise in the number of new COVID-19 cases. The current daily caseload has more than doubled from last week and is up more than 3.8 times compared to two weeks ago.
Seegene, a manufacturer of COVID-19 diagnostic kits, has also enjoyed a steep rise in its stock value. The company enjoyed a heyday in 2020 amid rising fears following the outbreak of the pandemic. But Seegene shares have lost momentum for additional growth since the second half of 2021.
The company's stock price reached a historic high of more than 160,000 won in August 2020, but has since been on a downward trajectory to this year's low of 33,750 won on June 23. But starting this month, its shares are on track for a robust rally with a closing price of 48,650 won, Tuesday.
Market analysts also remained optimistic over the reviving momentum of bio stocks.
“The ongoing stock rally of bio and pharmaceutical stocks has been driven by their relatively solid earnings performance and the growing possibility of a COVID-19 resurgence,” Ha Tae-ki, an analyst at Sangsangin Investment & Securities, said. “The trend is expected to continue throughout the third quarter.”
“Pharmaceutical stocks will remain attractive, as their earnings show little volatility even in this period of worsening macroeconomic conditions,” he said.