[MarketING] KOSPI Returns Gains Amid Foreign Selling...Pharmaceuticals and Bio Sectors Hold Up Well

KOSPI Declines After 3 Days... Retreats to 2450 Level
KOSDAQ Also Drops Below 870 Level

The KOSPI fell for the first time in three days, dropping to the 2450 level. Concerns over a slowdown in the U.S. economy strengthened the preference for safe-haven assets, leading foreign and institutional investors to sell off stocks and pull the market down. While the overall market showed weakness, pharmaceutical and bio stocks performed relatively well. There are expectations that pharmaceutical and bio stocks, which had been sidelined during the rising market, will recover some of their losses.

KOSPI Retreats to 2450 Level

On the 6th, the KOSPI closed at 2459.23, down 35.98 points (1.44%) from the previous day. The KOSDAQ ended the day at 865.58, down 6.78 points (0.78%).

Sales by foreign and institutional investors dragged the index down. In the securities market, foreigners sold a net 500.9 billion KRW, and institutions sold 205.3 billion KRW. In the KOSDAQ market, they sold 27.1 billion KRW and 47.8 billion KRW, respectively. Foreigners also net sold more than 1.6 trillion KRW in the futures market.

[Image source=Yonhap News]

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Due to consecutive weak U.S. economic indicators and growing recession concerns, foreigners expanded their selling in both spot and futures markets," adding, "They sold more than 1.6 trillion KRW in futures, leading the overall weakness in large-cap stocks such as semiconductors and secondary batteries." He further noted, "The outflow of foreign selling and recession fears reflected a preference for safe-haven assets, causing the won-dollar exchange rate to rise." On that day, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,319.1 KRW per dollar, up 8.6 KRW from the previous day's closing price.

While the market broadly declined sharply, pharmaceutical and bio stocks showed a favorable price trend. The KOSPI Pharmaceuticals Index rose 1.2%, marking the largest gain among KOSPI sector indices. Samsung Biologics rose 2.16%, Green Cross 1.25%, Yuhan Corporation 3.69%, Chong Kun Dang 1.87%, Hanmi Pharmaceutical 1.15%, and Celltrion 0.57%. In the KOSDAQ market, Celltrion Healthcare rose 1.94%, Celltrion Pharm 1.08%, HLB 0.7%, and Alteogen 2.87%, among others.

This was interpreted as influenced by the strong performance of healthcare stocks in the U.S. market the previous day and anticipation of the American Association for Cancer Research (AACR) conference scheduled for the 14th. Investment bank Raymond James upgraded UnitedHealth's investment rating to 'Strong Buy' considering its increased valuation appeal. As a result, UnitedHealth rose 3.24% and Cigna increased 3.64% in the U.S. market the previous day.

The anticipation of the AACR conference is also playing a role. The AACR is an international cancer conference where about 20,000 researchers from over 120 countries gather annually to share cancer-related knowledge and clinical research. Along with the American Society of Clinical Oncology (ASCO) and the European Society for Medical Oncology (ESMO), it is considered one of the world's top three cancer conferences. At this year's conference on the 14th, Yuhan Corporation, Hanmi Pharmaceutical, HLB, and ABL Bio are scheduled to present their research results.

Pharmaceutical and Bio Stocks, Previously Sidelined, Expected to Recover Losses

Pharmaceutical and bio stocks, which had been sidelined during the rising market, have recently shown an upward trend, raising expectations for price recovery. Although a trend reversal for pharmaceutical and bio stocks is not easy yet, it is expected that the excessive losses can be partially recovered.

The KRX Healthcare Index has risen 7.91% since March. The KOSPI 200 Healthcare Index also increased 5.83%, outperforming the KOSPI return of 1.92% during the same period.

Choi Yoo-jun, a researcher at Shinhan Investment Corp., explained, "Pharmaceutical and bio stocks are showing favorable price trends due to their relative immunity to macroeconomic variables and the inflow of rotation trading caused by supply-demand gaps."

Ha Tae-gi, a researcher at Sangsangin Securities, analyzed, "Bio company stocks had shown almost no reaction to positive news and had extremely low sensitivity to meaningful news," adding, "Recently, expectations for an improvement in market liquidity have been rising, leading to changes in the movement of growth stocks like bio stocks."

Although price momentum is reviving, opinions suggest it is still too early for a trend reversal. Researcher Ha said, "It is still difficult to expect a price increase based on corporate value created by new drug development, so it is premature to expect a price rise that would change the long-term trend of bio stocks," adding, "Rather, there has been an excessive price decline due to deteriorated market liquidity over the past year or more, and going forward, a limited level of price recovery filling this gap can be expected."

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