Theme Stocks Rekindled Amid COVID-19 Resurgence

Seegene·Access Bio
19~30% Surge Over 2 Trading Days
Online Education Stocks·Masks, etc.
Individual Investors Beware of 'Blind Investment'

[Asia Economy Reporter Minji Lee] Amid the resurgence of the novel coronavirus infection (COVID-19), the rapid rise of theme stocks that shook the stock market last March is reappearing. Market experts pointed out that investors should be cautious of 'blind investments' as diagnostic kit stocks recently showed an excessive rise in stock prices compared to their earnings, followed by a sharp decline.

According to the Korea Exchange on the 19th, most of the top stocks with large trading volumes from the 13th to the previous day were COVID-19-related theme stocks. The most actively traded stock was Seegene, the leading diagnostic kit company, with a total trading volume of 3.2587 trillion KRW over two trading days. During this period, Seegene's stock price surged about 19.2%, from 221,400 KRW to 263,500 KRW.

Access Bio, a company related to diagnostic kits, followed Seegene with a trading volume of 732.9 billion KRW. Access Bio successfully turned a profit in the second quarter and showed a rapid rise for two consecutive trading days. During this period, Access Bio's stock price rose about 30%, from 29,500 KRW to 38,300 KRW. Following were COVID-19-related companies such as HL Biopharma (663.7 billion KRW), RSUPPORT (581.2 billion KRW), Ilsin Bio (515.3 billion KRW), Sugentech (485.6 billion KRW), and YBM Net (461.4 billion KRW).

The rapid spread of COVID-19 again is believed to reflect concerns following a cluster infection centered around Sarang Jeil Church. Most of the actively traded stocks were classified as COVID-19 theme stocks, including masks, COVID-19 diagnostic kits, vaccines, treatments, remote work, and online education-related stocks, reflecting investors' anxious sentiment about the second wave in the stock market.

Looking at the most actively traded stocks from January 20, when COVID-19 first appeared in Korea, to April 19, when the high-intensity social distancing ended, the trend is similar to that seen in the stock market from June 14 to 18. Except for KMw, a 5G-related company, all the top stocks were COVID-19 theme stocks.

The stock with the largest trading volume was Seegene, with a total of 22.3355 trillion KRW traded in the market. During this period, Seegene's stock price rose 164%. Following were Celltrion Healthcare (17.0627 trillion KRW), related to diagnostic kits and treatments, Welcron (10.7414 trillion KRW), HL Biopharma (7.4104 trillion KRW), Miko (7.3877 trillion KRW), EDGC (6.5584 trillion KRW), Cellivery (6.1781 trillion KRW), and Labgenomics (5.9307 trillion KRW).

However, securities experts unanimously advised caution when boarding theme stocks that can easily collapse with small shocks. The flow of theme stocks changed from masks in the first half of the year to diagnostic kits, online education stocks, remote work, negative pressure rooms, and treatment and vaccine stocks, increasing the price volatility of related stocks. For example, YBM Net, an online education stock, saw its stock price soar to 10,350 KRW in March as discussions about students returning to school for the second semester intensified, but it dropped nearly 40% to 6,360 KRW on June 12.

It is also important to remember that companies that surged in the first half of the year with diagnostic kits as a theme recently fell sharply due to earnings shocks. Sugentech and Labgenomics reported earnings that met 20% and 50% of market expectations for the second quarter, respectively, and their stock prices fell about 25% and 11% on the day of the announcement.

As an investment strategy during the second wave of COVID-19, it was suggested to focus on companies with solid fundamentals. Donggeon Lee, a researcher at Shinhan Financial Investment, explained, "At this point, it is necessary to carefully select companies with solid fundamentals despite the resurgence of COVID-19," adding, "In pharmaceutical and bio companies, fundamentals can be a momentum that leads to earnings."

This content was produced with the assistance of AI translation services.