Healthcare Stocks Rally Amid COVID-19 'Doubling'

Index rises 7.6%, diagnostic kits and therapeutics strong

On the 18th, as the number of COVID-19 confirmed cases exceeded 40,000 for two consecutive days over the past weekend, citizens visiting the screening clinic set up at Mapo-gu Public Health Center in Seoul are waiting to get tested amid the ongoing spread. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Minji Lee] Investor interest in related stocks is growing amid the unusual spread of COVID-19.

According to the Korea Exchange on the 18th, the KRX Healthcare Index rose 7.59% from 2,859.67 to 3,076.71 between the beginning of this month and the 15th. It recorded the highest increase rate among all KRX indices, significantly outperforming the KOSPI return rate (-0.07%).

Looking at the stock price trend of Seegene, a representative company of COVID-19 diagnostic kits, one can observe changes in investor sentiment toward the healthcare sector. Seegene, which closed at 61,000 KRW at the end of last year, dropped by half to 36,000 KRW at the end of last month. This was due to concerns that the diagnostic kit business would not perform well as social distancing measures were eased, including the removal of outdoor mask mandates, and the daily confirmed cases fell below 10,000. However, as the number of COVID-19 cases increased, Seegene's stock price surged about 36% from 33,900 KRW to 46,400 KRW over the past 10 trading days.

Other stocks related to COVID-19 diagnostic kits and treatments also showed strong performance. Among the top 20 stocks with the highest increase rates in KOSPI and KOSDAQ this month, 12 were COVID-19 related stocks, indicating expanded investor sentiment. The most notable increase was Sejong Medical, whose stock price rose 84% from 3,370 KRW to 6,200 KRW. This was driven by its subsidiary Genensel’s development of the COVID-19 treatment ‘ES16001’. Additionally, stocks such as Hankook BNC (70.9%), Sugentech (68%), PCL (66.9%), Nano CMS (62%), Jin Matrix (60%), Ildong Holdings (59%), Cellivery (58%), Ildong Pharmaceutical (54%), Labgenomics (53%), Cellid (50%), and Bioneer (50%) experienced surges exceeding 50% within a short period.

However, indiscriminate investment in COVID-19 related stocks should be approached with caution. Looking at the buying trends of related stocks, since many individual investors have crowded in, if supply and demand become unstable, investors feeling price pressure may exit rapidly. In fact, on this day, Bioneer, a COVID-19 diagnostic kit seller, showed a decline of over 4%, demonstrating high volatility. Researcher Tae-gi Ha from Sangsangin Securities said, "The defensive nature of pharmaceutical stocks amid economic conditions and the possibility of a COVID-19 resurgence have combined to make the healthcare index outperform the market average," adding, "Focusing on pharmaceutical stocks with low earnings volatility will help improve returns."