As the country's first KOSDAQ active exchange-traded funds (ETFs) have rolled out in succession, pharmaceutical and biotech stocks are emerging as key holdings.
With biotech accounting for about 40% of the KOSDAQ150, expectations are growing that fund inflows through ETFs will lead to an improvement in supply-demand dynamics.
However, some predict actual investment performance will vary widely depending on each corporation's competitiveness, such as technology transfers and clinical trial results.
According to the industry on the 18th, biotech corporations have been heavily included in the portfolios of the KOSDAQ active ETFs recently listed by asset managers. On the day, Mirae Asset Global Investments listed the "TIGER Technology-Transfer Bio Active ETF," and Hanwha Asset Management listed the "PLUS KOSDAQ150 Active ETF." LigaChem Biosciences, OliX Pharmaceuticals, and ABL Bio were named among the main holdings.
Biotech weightings also stood out in the ETFs listed on the 10th. In Samsung Active Asset Management's "KoAct KOSDAQ Active" ETF, anti-cancer drug developer Qurient ranked No. 1 by investment weight, and Voronoi, ABL Bio, and Sam Chun Dang Pharm were included as major components.
On the same day, in Timefolio Asset Management's "TIME KOSDAQ Active" ETF, Sam Chun Dang Pharm and ABL Bio were among the top names, while Alteogen, LigaChem Biosciences, and Rznomics were included in the top 10.
These ETFs focus on core stocks centered on large caps by market capitalization, while actively adding small and mid-cap biotech names to pursue profitability.
In particular, a key feature is raising the weighting of small and mid-caps in the initial portfolios to respond to thematic rotations. Major holdings such as Alteogen, Sam Chun Dang Pharm, and ABL Bio are positioned around No. 3 to No. 5 in KOSDAQ market capitalization.
The market also sees the shifting business environment of global pharmaceutical companies as a potential opportunity for Korean biotech corporations.
Song Jae-won, senior manager in the equity management division at Mirae Asset Global Investments, said, "Global big pharma urgently needs new growth engines because of blockbuster drug patent expirations and pressure to cut prices," adding, "The most realistic option is to bring in promising development pipelines from outside." As a result, some say domestic biotechs have a growing chance to enter the global market through technology transfers.
Government policies to support the biotech industry are also cited as a positive factor. With expansions of the K-bio and vaccine funds and related disbursements continuing, a virtuous cycle could form in which unlisted biotech corporations grow and list on the KOSDAQ. This is also expected to help broaden the pool of ETF investment targets.
There are also expectations for an improvement in supply-demand conditions from ETF inclusion. If a stock is added to major holdings, increased inflows of new funds and more active trading could ease share price volatility. However, analysts note this effect is likely to differ by stock rather than appear uniformly, depending on the performance of individual corporations.
In the end, ETF inclusion does not immediately translate into share price stability or better supply-demand conditions. Unlike general manufacturers, biotech corporations often see "events" such as the value of new drug pipelines, technology transfer outcomes, and clinical trial results drive share prices more than sales or profit. While ETFs can play some role in stock selection, actual returns will inevitably diverge based on each corporation's research and development results.
Shin Min-su, an analyst at Kiwoom Securities, said, "Active ETFs selectively include stocks by factoring in LO (technology transfers) or clinical performance, rather than simple market capitalization," adding, "At first, a trickle-down effect may bring inflows across the sector, but over time, flows will concentrate on corporations with proven performance, and a full-fledged sorting of the wheat from the chaff is likely."
He added, "Ultimately, corporations with verified technological strength and pipeline competitiveness will stand out more, while those without will be relatively sidelined."