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Bio sector benefits most from K-New Deal Indexes

Finance Minister Hong Nam-ki briefs senior officials on details of the “Korean New Deal Fund” on Thursday. (Yonhap)
Finance Minister Hong Nam-ki briefs senior officials on details of the “Korean New Deal Fund” on Thursday. (Yonhap)
In line with the “Korean New Deal” economic stimulus package proposed by the administration of President Moon Jae-in, the nation’s sole bourse operator launched indexes on Monday that will be tracked by a 20 trillion won ($16.85 billion) “New Deal Fund.” On its first day, the bio index enjoyed a rally.

The Korea Exchange announced the five stock indexes -- for secondary batteries, bio, internet and games, as well as a comprehensive index encompassing all four sectors.

The comprehensive KRX BBIG K-New Deal Index began trading at 3,151.04, down 30.52 points or 0.98 percent from the previous session. The index fell slightly throughout the day to close at 3,094.98.

Among the four sectoral indexes, the KRX Bio K-New Deal Index showed the strongest performance. By starting 0.59 percent higher from the previous session, the index closed at 3,540.55, up 63.86 points, or 1.84 percent.

Until the early afternoon, the KRX Game K-New Deal Index was rising the most, but it suddenly moved downward late in the afternoon. The game index fell by 8.62 points, or 0.64 percent, to 1,336.10.

While the other sectoral indexes -- the KRX Secondary Battery K-New Deal Index and the KRX Internet K-New Deal Index -- got off to a solid start, they lost 2.34 percent and 1.92 percent, respectively, at the closing bell.

Amid the launch of the five new deal indexes, market watchers said they are likely to attract more investors to growth-driven stocks such as secondary batteries, biotechnology, health care and games.

The biotech sector benefited the most on the first day of trading, but some market watchers forecast that the game sector is likely to benefit even more due to its market capitalization and trading volume.

Among the four sectoral indexes, the game sector had the smallest market and trading values. As of Friday, the market value of the 10 game stocks that make up the KRX Game K-New Deal Index came to some 45.17 trillion won, about 2.32 percent of the total local stock market cap, while their trading value marked 934.7 billion won.

Meanwhile, the market cap of the 10 bio stocks that constitute the KRX Bio K-New Deal Index was the biggest, recording 148.53 trillion won, 7.64 percent of the total market value. At the same time, the trading volume reached nearly 1.49 trillion won on the same day.

“Amid smaller trading volume in the game sector compared with other sectors, it is likely to be impacted the most in supply and demand. With a similar amount of demand in the game sector, it will be impacted relatively positively,” said Lee Sang-min, an analyst at KakaoPay Securities.

As the KRX had said earlier that it aimed to launch the KRX BBIG exchange-traded fund next month, another market expert painted a rosy outlook for the game sector, as it is expected to further boost the related stocks.

Lee Eun-taek, an analyst at KB Securities, said that with the launch of the ETF, passive funds may flow to the index-driven stocks, especially to the industry with the smallest market cap, the game sector.

By Jie Ye-eun (yeeun@heraldcorp.com)
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