Is the Dominance of Top Bio Stocks in KOSDAQ Market Cap Coming to an End?

Sgene and HL Biotech Plunge Due to Negative News
Kakao Games and Other Gaming Stocks Surge

[Asia Economy Reporter Song Hwajeong] The dominance of bio stocks in the top market capitalization rankings on the KOSDAQ is undergoing a change. Bio stocks, which had been strong due to expectations for diagnostic kits and vaccines after COVID-19, have recently been shaken by poor earnings and negative factors.

According to the Korea Exchange on the 24th, Kakao Games rose to 4th place in market capitalization based on the previous day's closing price. Meanwhile, Seegene, which was previously 4th, plunged 15% and fell to 8th place. Earlier, on the 16th, HL Biopharma dropped 27% amid false disclosure controversies, falling sharply from 3rd to 8th place.

Since last year after COVID-19, with the sharp rise of Seegene, Alteogen, and Celltrion Pharm, the top 5 market capitalization structure on the KOSDAQ had been maintained with leading stocks including Celltrion Healthcare, Celltrion Pharm, HL Biopharma, Seegene, and Alteogen.

However, recently, cracks have begun to appear in this structure due to accounting standard violations and false disclosure controversies. Earlier, on the 8th, the Securities and Futures Commission took measures such as imposing fines on Seegene for violating accounting treatment standards at its regular meeting. In addition, the 4th quarter earnings fell short of market expectations, leading to a recent sharp decline. Seegene recorded consolidated sales of 441.7 billion KRW and operating profit of 257.5 billion KRW in the 4th quarter of last year. Although these figures increased by 1207.9% and 4921.9% respectively compared to the same period the previous year, they fell short of market expectations. HL Biopharma's stock price dropped from the 90,000 KRW range to the 60,000 KRW range due to disclosure controversies related to the gastric cancer anticancer drug ‘Rivoceranib’.

Game stocks, led by expectations for new releases, are advancing by taking advantage of the bio stocks' slump. Pearl Abyss, which was 9th at the end of last year, has steadily risen this year and reached 5th place at the end of last month, climbing to 3rd place this month. The anticipation for the major new release ‘Red Desert’ has been a factor in the stock price increase. Kakao Games, which was 8th at the end of last year, recovered to 50,000 KRW this month and rose to 4th place in market capitalization. Yoon Euljeong, a researcher at Shin Young Securities, said, "Kakao Games is scheduled to release more than 10 new games including ‘Odin’ in the 2nd quarter and ‘Eternal Return’ in the 3rd quarter this year," adding, "In addition, global services for previously released games such as ‘Light Chaser’ in the 2nd quarter and ‘Elion’ in the 4th quarter are planned, which is expected to drive earnings growth."