Covid Drug, EV Batteries Were Winning Korean Stock Bets in 2020

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The 1,600% jump in a Covid-19 drugmaker loved by retail traders and big gains for electric-vehicle battery suppliers were among the top highlights this year in South Korea’s stock market.

Shin Poong Pharmaceutical Co., which is developing its malaria drug Pyramax as a treatment for the coronavirus, rose more than any other Korean stock. Its 16-fold gain also topped the 1,573-member MSCI Asia Pacific Index.

With Tesla Inc.’s S&P 500-best performance one of the other major stories of 2020, investors sought out EV plays worldwide. Tesla’s top battery supplier LG Chem Ltd. climbed 160%, the second-largest contributor to gains in South Korea’s main stock index.

The Kospi jumped more than 30% this year, the second-biggest advance among global benchmarks following Nigeria’s. A record surge in individual investors plus a boost from foreign investors in November helped drive Korea’s total market value to over $2 trillion, surpassing Australia and Switzerland.

The growing horde of mom-and-pop traders showed a special appetite for risky investments including small-cap health-related shares. Pharmaceutical and medical device makers accounted for seven of the nation’s biggest gainers in 2020.

“The abundant liquidity from retail investors may support the healthcare sector at least until early next year,” said Heo Pil-Seok, chief executive officer at Midas International Asset Management Ltd. Among other ideas for 2021, “some value stocks look attractive with yields rising recently amid hopes for global economic recovery, such as chemicals, refineries, steel and builders,” he said.

Covid Drug, EV Batteries Were Winning Korean Stock Bets in 2020

Winners

Seegene Inc. (+530%)

The diagnostics firm was lifted by the Korean government’s rigorous testing for Covid-19 and strong demand for test kits globally. The big stock gain drove up the fortune of the company’s founder.

Doosan Fuel Cell Co. (+522%)

The maker of fuel cells for hydrogen-powered vehicles got a boost from President Moon Jae-in’s $35 billion push for low-carbon industries, as well as the global boom in alternative-fuel cars sparked by Tesla. Among EV-battery plays beyond LG Chem, investors snapped up shares of maker Samsung SDI Co. (+166%) and materials supplier Posco Chemical Co. (+125%).

SK Chemicals Co. (+513%)

The chemicals unit of the SK Group soared after Bill Gates backed its unit SK Bioscience’s plan to accelerate development of a Covid-19 vaccine. The company was also selected as a contract manufacturer for AstraZeneca Plc’s virus shot. Affiliate SK Biopharmaceuticals Co. conducted an initial public offering in July and its shares have climbed 245% since listing.

HMM Co. (+293%)

Investors snapped up shipping company HMM as the online home-shopping boom in the U.S. sent transpacific sea-freight rates to the highest on record in 2020. Hopes for a recovery in global trade as vaccines are rolled out drove the stock up even further later in the year.

Kakao Corp. (+154%)

While the stay-at-home trend drove up Internet shares around the world, South Korea’s most-popular messaging app helped online giant Kakao outperform compatriot rival Naver Corp. (+57%). Shares of Kakao Games Corp., the unit that operates the Kakao Talk app, have advanced 92% since listing in September. In addition to games and chat, Kakao Talk can also be used for online shopping and financial investment.

Neutral Zone

Amorepacific Corp. (+3%)

Cosmetics maker Amorepacific was one of the worst-hit Kospi 200 members in the initial virus selloff, dropping 38% from peak to trough, as restrictions halted duty-free and other travel-related sales as well as shuttering retail stores. That came on top of China’s ban on group travel packages to South Korea amid soured relations, which hurt sales of goods popular with tourists and dragged on Amorepacific’s shares for the past few years. The stock has mounted a dramatic recovery, rising 30% since the start of November, helped by Chinese foreign minister Wang Yi’s visit to Seoul to seal trade and other agreements.

Covid Drug, EV Batteries Were Winning Korean Stock Bets in 2020

Losers

Samsung Engineering Co. (-31%)

Samsung Engineering, which generates more than half of its revenue from overseas construction projects, suffered from delays in large-scale projects amid slower activity and social-distancing measures. The stock jumped 16% in November after the firm signed a letter of intent for a refinery project in Mexico, paring some of the year’s sharp loss and sparking hopes for a turnaround in 2021.

S-Oil Corp. (-27%)

Refiner S-Oil dropped as oil prices and global demand for petroleum products declined on the virus-driven slowdown in activity. Still, the stock has rebounded about halfway since the start of November with investors expecting a recovery in global growth.

Lotte Shopping Co. (-24%), BGF Retail Co. (-20%)

Retail was one of the hardest-hit sectors by the coronavirus. Lotte Shopping was hurt by sharp declines in department-store traffic. Convenience-store operator BGF saw sales plummet at locations in tourist destinations and near university campuses.

Coway Co. (-22%)

Coronavirus-related restrictions hurt demand for the company’s air and water purifiers for use in public places like restaurants and schools. There was also less need for products to fight air pollution as the pandemic halted factory operations.

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