Investor sentiment in the global biotech sector has strengthened, leading related exchange-traded funds (ETFs) to dominate the top returns in South Korea over the past week. Following strong performances from major pharmaceutical companies and a series of positive results in new drug trials, global biotech stocks have rebounded, with warmth spreading to domestic related stocks.
According to the Korea Exchange on August 21, from August 14 to 20, several global biotech-related ETFs ranked among the top 10 in returns (excluding leverage and inverse funds). The 'TIME Global Bio Active' ETF topped the list with an 8.40% return, followed by 'KoAct U.S. Bio Healthcare Active' at 7.96%. Other notable ETFs included 'KIWOOM U.S. Blockbuster Biotech' (5.89%), 'KODEX U.S. S&P Bio (Synthetic)' (5.31%), 'TIGER U.S. Nasdaq Bio' (5.27%), and 'ACE Global Big Pharma' (4.60%).
The concurrent strength of these global biotech ETFs is attributed to the conclusion of second-quarter earnings reports from major pharmaceutical companies, which alleviated uncertainties regarding their performance. Additionally, positive results from new drug trials have emerged. Notably, on August 19, U.S. vaccine developer Moderna and global pharmaceutical giant Merck (MSD) reported that their mRNA cancer vaccine combined with Keytruda met key endpoints in a Phase 3 trial for melanoma, raising expectations for the commercialization of the first personalized mRNA cancer treatment. As a result, Moderna's stock surged by as much as 177% during trading.
Lee Ji-soo, a researcher at Daol Investment & Securities, stated, "The strong performances of major pharmaceutical companies and consecutive clinical successes have driven the rise of the Nasdaq Bio and S&P Healthcare indices." The top-performing ETFs, such as TIME Global Bio Active and KoAct U.S. Bio Healthcare Active, have significant holdings in Moderna, suggesting that the recent surge in Moderna's stock has positively impacted the ETFs' returns.
The strength of the global biotech sector has also spilled over to domestic related stocks. Samyang Biopharm closed at 56,200 won, up 12,900 won (29.79%) from the previous trading day. This increase is believed to be linked to the announcement of clinical results by Moderna and MSD on the same day that Samyang Biopharm revealed its own mRNA cancer vaccine delivery system research results. Somagen, which has been supplying DNA and RNA genomic analysis services to Moderna, also saw its stock rise by 29.98% (865 won) to 3,750 won. Additionally, Naivec, which is developing a peptide-based mRNA drug delivery platform called PEPTARDEL to address the limitations of existing lipid nanoparticles (LNP), closed up 19.82% (3,160 won) at 19,100 won.
However, analysts caution that after a sharp rebound in a short period, there may be limited events to support further gains, raising the potential for increased volatility. Lee noted, "Domestic biotech stocks have shown signs of bottoming out since forming a low at the end of July, but August is a period with few events, such as conferences and domestic companies' clinical announcements. Given the significant rebound in a short time, it is important to remain cautious about potential profit-taking adjustments and increased volatility."
* This article has been translated by AI.
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