[Biden Effect Beneficiaries] Diagnostic Kit Stocks and Chinese Consumer Stocks Raise Expectations

Biden Effect Strongly Felt
Stocks Rise for Celltrion, Seegene, LG Household & Health Care, and More

[Image source=Yonhap News]

[Asia Economy Reporters Juyoun Oh and Jihwan Park] With Joe Biden, the Democratic candidate, elected as the President of the United States, attention is focused on whether COVID-19 diagnostic kit stocks and Chinese consumer sectors such as cosmetics, duty-free, and apparel industries will become beneficiaries.

According to the Korea Exchange on the 9th, as of 9:35 a.m., diagnostic kit stocks, considered representatives of K-quarantine, rose with Celltrion up 3.42% to 287,000 KRW and Seegene up 2.07% to 280,800 KRW during the trading session. Before his inauguration, President-elect Biden expressed his intention to actively respond to COVID-19 by forming a dedicated task force (TF). In his victory speech, he said, "I will immediately appoint a group of experts to handle COVID-19." This supports his pledge to prioritize COVID-19 response after taking office.

In particular, he pledged to provide free COVID-19 diagnostic testing for all Americans. This raises expectations for expanded export opportunities for diagnostic kit companies such as Seegene, a leading domestic diagnostic kit company, and Access Bio, which has received the most FDA Emergency Use Authorizations (EUA).

The fact that the second wave of the COVID-19 pandemic is becoming visible is also positive for stock prices. As of the 8th (local time), the total number of confirmed COVID-19 cases worldwide exceeded 50 million. This is 313 days, or about 10 months, since the first reported case of COVID-19 in Wuhan, China, at the end of December last year. The cumulative confirmed cases reached 10 million in 179 days after the first outbreak, then 20 million on August 9, 30 million on September 16, and 40 million on the 17th of last month.

Seon Minjung, a researcher at Hana Financial Investment, said, "As the second wave of COVID-19 has recently started in Europe, the daily number of confirmed cases worldwide is surging. Even if the COVID-19 vaccine development succeeds, demand for diagnostic kits will inevitably be maintained, so large-scale diagnostic kit exports are expected next year as well."

Chinese consumer stocks, which have seen their prices plummet whenever US-China trade tensions flared, are also drawing attention to whether they can escape sudden negative shocks under the Biden administration. Under the Trump administration, as relations with China worsened, domestic Chinese consumer stocks such as cosmetics, duty-free, and apparel experienced a rollercoaster ride. Especially, these sectors are expected to see sales growth ahead of the China’s largest shopping festival, the Guanggun Festival, opening on the 11th.

Cosmetics-related stocks such as LG Household & Health Care and Amorepacific are on the rise. LG Household & Health Care, which was priced at 1.5 million KRW as of the 30th of last month, traded at 1,529,000 KRW at 9:40 a.m. on this day, and Amorepacific rose 4.11% from 158,000 KRW to 164,500 KRW during the same period. Other stocks such as Kolmar Korea (3.75%) and Korea Cosmetics (6.61%) also rose this month. An Jiyoung, a researcher at IBK Investment & Securities, said, "Cosmetics demand recovery is becoming visible ahead of the Guanggun Festival."

Outlooks for apparel companies are also positive. F&F, which announced its third-quarter earnings last week, saw its stock price rise more than 4% during the trading session on this day. Hanuri, a researcher at Meritz Securities, said, "Although duty-free sales remain sluggish, growth potential in the Chinese business is expected to continue. The Guanggun Festival, China’s largest shopping event, is also not far off," expressing optimism.