Drugmaker Jumps 1,900% as Korea Retail Traders Bet on Covid Cure
Drugmaker Jumps 1,900% as Korea Retail Traders Bet on Covid Cure
(Bloomberg) -- The best-performing stock in South Korea this year has ridden a gain of over 1,900% to a market value of more than $6 billion as the nation’s retail investor horde bets on a possible coronavirus treatment.
Shin Poong Pharmaceutical Co.’s 1,923% share price rise is the biggest rise of any Korean stock in 2020, according to data compiled by Bloomberg. Its market capitalization has jumped to nearly 7.8 trillion won ($6.6 billion) from around 380 billion won at the start of the year.
The 58-year-old company once known for parasitic worm remedies is currently conducting a phase 2 clinical trial of its malaria drug Pyramax as a treatment for Covid-19. The company has received so many inquiries about the drug that it posted a statement on its website recently warning people against improper use as it hasn’t yet been approved as a treatment for the coronavirus, a spokesman told Bloomberg by phone.
Pryamax isn’t the only malaria drug to be considered in the hunt for a coronavirus treatment. The U.S. to Food and Drug Administration cleared hydroxychloroquine for Covid-19 in March on urging from President Trump but had to rescind approval in June when studies showed it didn’t work. Pryamax, which uses two different drugs, is estimated to reach primary completion of its Covid-19 trial in December.
Expectations for the drug have helped make Shin Poong the second-most-traded issue on the benchmark Kospi index by retail investors this year, after Samsung Electronics Co. The global surge in retail investing this year driven by lockdown free time and record-low interest rates has been particularly acute in South Korea, and biotech has been one of the favorite targets. Day traders have accounted for over 80% of Korea stock trading over the past few months.
In addition to the spotlight on health and boom in retail trading, Shin Poong’s stock has also benefited from its addition last month to the MSCI Korea Index. The shares, which have no analyst coverage, are trading at about 4,200 times reported earnings for last year.
“The stock is becoming an icon of Korea amid the spread of the virus and the low interest rates,” said Jeon Kyung-Dae, chief investment officer for equities at Macquarie Investment Management Korea. “Retail investors are buying the future value of the company.”
©2020 Bloomberg L.P.