Chinese Vaccine Maker Stocks and Biopharma ETFs Soar as SARS-like Virus Spreads
The Chinese government announced a sharp increase in the number of patients diagnosed with 'Wuhan pneumonia' on the eve of Spring Festival. Investors are making forays into related stocks, in a move to put a price on a possible catastrophe.
China has announced 136 new cases of a yet-to-be-explored coronavirus with a statement released by the Wuhan Health Commission at 2:42 AM on January 20. The new mysterious SARS-like virus has already claimed three lives and emerged in Beijing, Shenzhen, Japan, Thailand, and South Korea – most of these patients visited Wuhan in the last month, the believed-epicenter of the virus. It has attacked men, women, young and old alike.
Meanwhile, Chinese vaccine makers and some biotech stocks have soared as markets opened after the early-morning press release. The price of a Biotech ETF in HK (9820: HK) increased by 2.6% to USD 9.13; and two major vaccine-makers, Jiangsu Sihuan Bioengineering (四环生物) (0518: SH) and Shenzhen Kangtai Biological Products (康泰生物) (300601: SH) jumped around 10% and 6% respectively, responding to the release from the Wuhan Health Commission.
Facemask-maker stocks have also increased this morning: Shanghai Dragon Corporation (600630: SH）and Shanghai Shenda (申达股份) (600626: SH) jumped around 10 % and 6 % respectively.
In vitro diagnostics stocks are also expected to jump as the virus spreads around China, and beyond. For now, China’s National Health Commission sees the new outbreak as "controllable," despite naysayers speculating about the chaos around the Spring Festival – when hundreds of millions travel.
The SARS crisis in 2002-2003 brought awareness about responding to such massive epidemics in China; this was followed by the State Council's healthcare reform proposal in 2007. The epidemic changed the way the mainland responds and maneuvers. "Strong political commitment and a centrally coordinated response were most important for controlling SARS," stated an article at the Global Health Journal after the epidemic in the mainland.
As hundreds of millions of Chinese prepare to travel, analysts are eyeing the after-festival period to guess the direction of the markets.