The resurgence of COVID-19 infections leads to a surge in Asian pandemic concept stocks

The COVID-19 pandemic has resurged in Asia, leading to increased market expectations for testing and vaccine demand, resulting in a collective surge in stock prices of COVID-19 testing and drug production companies in Asia.

On Monday, South Korean diagnostic kit manufacturer Sugentech performed the best, with its stock price soaring by as much as 29%. In Japan, COVID-19 vaccine manufacturer Daiichi Sankyo saw its stock price rise by up to 7.4% due to UBS raising its target price. Meanwhile, in Hong Kong, Shanghai Junshi Biosciences Co., Ltd., as a COVID-19 vaccine producer, also saw its stock price increase by 4.3%.

The new wave of the pandemic is rapidly spreading across Asia. According to data from the Chinese Center for Disease Control and Prevention, this new round of infections could reach levels seen during last summer's peak. Xu De-yi, head of the Hong Kong Centre for Health Protection, stated at a press conference that COVID-19 activity levels are expected to remain high in the coming weeks.

To prevent a rebound of the pandemic, the Korea Disease Control and Prevention Agency (KDCA) has directly extended the seasonal COVID-19 vaccination period by two months, until the end of June. KDCA specifically recommends that seniors aged 65 and older, immunocompromised individuals, hospitalized patients, and nursing home staff should receive the Pfizer and BioNTech jointly produced JN.1 vaccine as soon as possible.

KDCA also pointed out that over the past three years, COVID-19 has not only surged in winter but has also become a significant transmission period in summer, thus early vaccination can better ensure immune effectiveness.

Affected by the pandemic rebound and vaccination plans, stock prices of COVID-19 testing and vaccine companies in South Korea generally rose on Monday, with testing companies such as Humasis, LabGenomics, Seegene, and SD Biosensor all recording gains, and COVID-19 vaccine manufacturer SK Bioscience seeing its stock price rise by up to 7.2%.

In this regard, Gary Tan, an investment manager at Singapore investment firm Allspring Global Investments, analyzed that retail funds still dominate the market in South Korea's small-cap pharmaceutical sector. As the pandemic rebounds, retail investors see opportunities and actively position themselves in pharmaceutical stocks, driving short-term increases in related individual stocks.

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