Healthcare ETFs Also 'Weak' Amid Concerns Over Bio Stocks' Earnings

Bio Stocks Weakness Leads to 7 Out of 10 Lowest Performing Stocks in Returns

[Asia Economy Reporter Song Hwajeong] As biotech stocks continue to weaken, healthcare exchange-traded funds (ETFs) are also showing sluggish performance. Concerns over poor third-quarter earnings are suppressing biotech stock prices.

According to the Korea Exchange on the 18th, since the beginning of this month, TIGER KRX Bio K-New Deal has fallen 9.68%, marking the second-largest decline among all ETFs. KODEX Healthcare (-8.20%), TIGER Healthcare (-8.09%), ARIRANG KRX300 Healthcare (-7.63%), KBSTAR Healthcare (-7.05%), TIGER KOSDAQ150 Biotech (-7.02%), and KODEX Bio (-6.75%) also dropped significantly. Among the 10 worst-performing ETFs, seven were healthcare ETFs.

This poor performance of ETFs is due to the weakness in biotech stocks. Large-cap biotech stocks have recently shown a sluggish trend. Celltrion fell 20.15% over the past month, dropping its market capitalization ranking to 10th place. Celltrion Healthcare declined 23.87%, with its stock price falling from the 110,000 KRW range to the 80,000 KRW range. Celltrion Pharm also dropped 19.34%. Samsung Biologics fell 6.86% during the same period, while Seegene and Alteogen declined 18.27% and 4.75%, respectively. The weakening momentum in vaccine and treatment development due to the development of oral COVID-19 treatments, combined with concerns over poor third-quarter earnings, had a significant impact.

Shinhan Investment Corp. forecasted that Celltrion's third-quarter earnings would fall short of market consensus by 23% in sales and 32% in operating profit, and Celltrion Healthcare's operating profit is expected to be about 19% below consensus. Diagnostic kit companies, which had recorded high growth after COVID-19, are also expected to see sales and operating profit decrease by 16.9% and 23.2%, respectively, compared to the previous quarter. Researcher Lee Donggeon of Shinhan Investment said, "With the emergence of oral treatments, the momentum for domestic COVID-19 treatments and vaccine development has weakened, and the earnings momentum for pharmaceutical and biotech companies in the third quarter will also be limited. Among large-cap biotech stocks, Celltrion Group's earnings decline is expected to continue, and the earnings momentum of aesthetic companies will also be limited."