Business · Markets · 2 hrs ago
South Korean biotech shares hold up as chip stocks fall
South Korean stocks fell sharply this month, but healthcare shares held up better than the wider market.
Through the previous day, the KRX 300 Healthcare index rose 0.46%, while the Kospi fell 18.80%.
Celltrion gained 11.09% and Samsung Biologics rose 0.78%, while Samsung Electronics and SK Hynix fell 21.23% and 31.14%.
Weak chip stocks helped draw attention to biotech as investors worried about whether artificial-intelligence investments will pay off.
Analysts say medicine demand can be less affected by economic swings, and past market downturns in the United States and South Korea often saw healthcare outperform semiconductors.
That history does not make biotech a dependable safe haven: one analyst said it behaves more like a growth sector that can move differently from leading stocks.
Analysts highlighted Celltrion and Samsung Biologics, but no specific next step for investors was stated.
South Korean healthcare shares held up as the broader market and major chip stocks fell in October.
The KRX 300 Healthcare index rose 0.46% through the previous day, while the KOSPI fell 18.80%.
Celltrion gained 11.09% and Samsung Biologics rose 0.78% over the same period.
Analysts said healthcare stocks may benefit when semiconductor leaders weaken, but one analyst cautioned that the sector is not a traditional defensive investment.
Historical data cited in the report showed healthcare and pharmaceutical shares often outperformed during periods of sharp semiconductor declines.
- Who
- South Korean pharmaceutical and biotechnology companies, including Celltrion and Samsung Biologics.
- What
- Healthcare shares held up as the KOSPI and major semiconductor stocks fell.
- When
- In October, through the day before the report’s cited market data.
- Where
- South Korea’s stock market.
- Why
- Analysts linked the relative strength to healthcare’s lower sensitivity to economic fluctuations and to investors shifting away from weak semiconductor shares.
Analysts viewing healthcare as defensive
Kim Jun-young of iM Securities
Sector character
Analysts viewing healthcare as defensive
Healthcare shares can be a defensive alternative during market volatility because medicine demand is relatively inelastic.
Kim Jun-young of iM Securities
South Korean healthcare is closer to a growth sector moving differently from market leaders than a traditional defensive sector.
Down-market performance
Analysts viewing healthcare as defensive
The sector has often held up better than leading industries during sharp market declines.
Kim Jun-young of iM Securities
Its win rate in down months is 55%, below the 79% rate for consumer staples.
The KOSPI and major semiconductor stocks fell sharply while healthcare shares held up.
The KRX 300 Healthcare index gained 0.46%, while the KOSPI fell 18.80%.
During the dot-com crash, the S&P 500 fell 49% and semiconductors fell 84%, while healthcare equipment and services rose 23%.
In 30 periods when US semiconductors fell more than 20%, pharmaceutical and biotechnology shares outperformed the S&P 500 in 90% of cases.
- KRX 300 Healthcare
- Up 0.46% in October through the previous day
- KRX Healthcare
- Down 0.06%; third-best return among KRX industry indices
- KOSPI
- Down 18.80% over the same period
- Samsung Electronics
- Down 21.23%
- SK Hynix
- Down 31.14%
- Celltrion
- Up 11.09%
What people are saying
The pharmaceutical industry is a representative defensive industry, with limited concerns about earnings damage due to the inelastic nature of demand for medicines, and is one alternative that can hedge current market volatility.
It is closer to a growth sector that moves in a different direction from market leaders than a sector that falls less when the index drops.