As the KOSDAQ active exchange-traded fund (ETF) market opens, a "synchronization market" in which bio stocks move as one group is strengthening. In the past, share prices moved up and down by stock depending on clinical results or individual corporations' issues, but recently the entire bio sector has been rising or falling at the same time in repeated cycles.
According to Koscom ETF Check on the 7th, since listing on Apr. 10, KoAct KOSDAQ Active by Samsung Active Asset Management and TIME KOSDAQ Active by Timefolio Asset Management drew inflows of 1.0292 trillion won and 516.4 billion won, respectively, through May 3. Net asset size also increased rapidly, ranking No. 2 and No. 4 in net asset growth among all ETFs over the past month.
Both products include many bio corporations that rank high by market capitalization on the KOSDAQ. As bio corporations lead the KOSDAQ market, they hold Alteogen, Sam Chun Dang Pharm, ABL Bio, LigaChem Biosciences, OliX Pharmaceuticals, and others.
Because major ETFs commonly include similar bio stocks, an issue at a particular stock leads to supply-and-demand shifts across ETFs, which in turn affects the entire sector's share prices.
An ETF analyst at a securities firm said, "As the ETF market itself gets bigger, its impact on individual stock flows inevitably grows as well," adding, "On the KOSDAQ, flows into bio stocks with high weights will inevitably increase, and the impact on individual bio stocks is expected to grow."
This structure is evident in actual price action. On the 2nd, when LigaChem Biosciences, the No. 11 corporation on the KOSDAQ by market cap, disclosed that part of its antibody joint research and licensing deal with Novalock Biotherapeutics in the United States had been terminated, its share price fell 11.73% from the previous trading day. In turn, Sam Chun Dang Pharm (-18.15%), ABL Bio (-11.22%), and Kolon TissueGene (-7.74%) also declined.
A similar pattern has repeated before. On Apr. 31, when Sam Chun Dang Pharm hit the lower limit after stock manipulation allegations, key bio stocks such as Orum Therapeutics (-9.38%), Aimed Bio (-5.98%), and LigaChem Biosciences (-3.52%) also fell, reinforcing the synchronization phenomenon.
On the same day, outflows from KoAct KOSDAQ Active and TIME KOSDAQ Active also expanded sharply. On the 2nd, the two ETFs fell 6.73% and 6.85%, respectively, from the previous trading day. KoAct KOSDAQ Active's total net assets plunged by about 63.5 billion won in a single day, and TIME KOSDAQ Active saw 34 billion won in outflows.
In particular, despite being active ETFs, the KOSDAQ market's limited stock pool leads them to include similar names, resulting in price movements similar to passive ETFs, critics noted.
An industry official said, "Although the weighting of specific stocks varies by KOSDAQ active ETF, they commonly hold top bio stocks by market capitalization, so from an investor's perspective it can feel similar to tracking the underlying index."
However, some say the KOSDAQ active ETF market is still in its early stages and needs more time. They cite the difficulty for active ETF managers to deploy aggressive strategies as market volatility has increased amid the recent war in Iran.
Cho Seung-bin, a Daishin Securities analyst, said, "Volatility in the market lately has been so high that, as you adjust holdings to pursue stability, it can be hard to deviate meaningfully from the underlying index," but added, "Given factors such as strong policy expectations for the KOSDAQ market, it is also too early to judge in the short term."