'Mask-related Stocks' Decline Continuously This Month

The decision on whether to extend the social distancing level 2.5 currently applied in the Seoul metropolitan area is expected to be made around this weekend. On the 8th, Yoon Tae-ho, head of the Central Disaster and Safety Countermeasures Headquarters' quarantine team, emphasized at a regular briefing held at the Government Complex Sejong, "Thanks to the active participation and practice of the public, the effects of social distancing are becoming visible," adding, "In the metropolitan area, the number of domestically confirmed cases is 98, maintaining double digits for two consecutive days, showing signs of the spread calming down." Regarding the extension of the 2.5-level distancing in the metropolitan area, Yoon said, "We still need to observe the trend a bit more," but added, "I think the final decision and announcement will be made around this weekend." The photo shows a mask-wearing guidance notice attached to the floor at Yongsan Station on the same day. Photo by Moon Ho-nam

[Asia Economy Reporter Park Jihwan] Mask-related stocks, which surged last month due to the resurgence of COVID-19, have been falling one after another since the beginning of this month.

As of 10:24 a.m. on the 21st, the stock price of Welcron, a leading mask company, is trading at 6,800 won, down 70 won (1.02%) from the previous day. Welcron's stock price rose sharply from the 5,000 won range to the 9,000 won range in a short period due to increased demand expectations for masks following the surge in new COVID-19 cases centered in the metropolitan area last month. However, the stock price has gradually declined this month and is currently down more than 20% compared to the previous month's peak.

The same applies to other mask manufacturers. Lemon's stock price fell 15.7% from 19,700 won on the 20th of last month to 16,600 won on this day. KM's stock price, which was over 20,000 won a month ago, has dropped to 14,400 won.

The recent decline in mask companies' stock prices is mainly due to the bleak market outlook. Currently, about 10 companies, including Welcron, evenly occupy the mask market. However, the domestic market is already saturated due to oversupply. Since the public mask system was abolished in July, the Ministry of Food and Drug Safety (MFDS) certified masks, which once rose to 1,500 won, are now being sold in the 700 to 900 won range.

The current domestic mask supply exceeds twice the market demand. Even if every Korean citizen consumes one mask per day, a maximum of 50 million masks would be needed daily, but the current weekday daily mask production, including non-MFDS-certified companies, reaches 80 to 90 million. This means that more than 30 million masks remain unsold in the market each day.

The recent decline in new domestic COVID-19 cases is also bad news for mask-related stocks. The daily new confirmed cases in Korea have been in double digits for two consecutive days. The number of cases in the metropolitan area has dropped to the 50s for the first time since the second wave.

The Central Disease Control Headquarters announced that as of midnight on this day, the number of new COVID-19 cases increased by 70 from the previous day. The cumulative confirmed cases stand at 23,045. Since mid-August, when the COVID-19 resurgence centered in the metropolitan area began in earnest, the number fell below 100 for the first time yesterday to 82 and has remained in double digits for two consecutive days.

A financial investment industry official said, "Since the COVID-19 resurgence in August, mask-related stocks that regained popularity have been falling again this month," and advised, "Rather than investing in stocks based on the spread of COVID-19, it is necessary to comprehensively consider financial conditions such as earnings."

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