The global biotech investment landscape is sharply divided between the United States and South Korea. While the U.S. biotech sector continues to soar, the domestic sector in South Korea is experiencing a downturn, leading to an unprecedented decoupling phenomenon.
According to the Korea Exchange on July 6, the domestic representative biotech exchange-traded funds (ETFs), 'TIGER Bio TOP10' and 'KODEX Bio,' have been unable to escape a downward trend.
The KODEX Bio ETF, managed by Samsung Asset Management, closed at 8,705 won, down 355 won (3.92%) from the previous trading day. This marks a staggering 42.73% drop from the beginning of the year when it was priced at 12,425 won, falling below the 9,000 won mark. Other major domestic biotech products, including the TIGER Bio TOP10 from Mirae Asset Management, have also faced declines in July, continuing a poor performance. The KRX K-AI Biotech KOSDAQ index fell by 10.30% this month, while the KRX Bio TOP10 index dropped by 2.95%.
In contrast, the U.S. biotech ETF 'XBI (SPDR S&P Biotech ETF)' has been on a different trajectory. XBI has consistently reached new 52-week highs, closing at $160.46 on July 2. This represents a 32.04% increase from the beginning of the year when it was priced at $121.52, nearing its all-time high of $173.99 set on February 8, 2021, during the pandemic's peak.
During the COVID-19 pandemic, both markets experienced a surge, followed by a correction during the interest rate hikes in 2022. However, this strong correlation broke down at the beginning of this year. As global interest rate cut expectations emerged, the U.S. XBI hit its low and began a rally, steadily surpassing previous highs. In contrast, the domestic biotech sector only saw a temporary rebound and has since declined further after a brief surge in March. While the U.S. market breaks new ground, the South Korean market has been on a downward trend, leading to an unprecedented decoupling between the two markets over the past decade.
Market experts attribute this phenomenon to a severe concentration of supply and demand in specific leading themes, such as semiconductors, within the domestic market, which has diminished overall confidence in the KOSDAQ market, hindering the biotech sector's performance. An asset management official stated, 'The KOSDAQ market itself is under significant pressure due to various complex factors,' adding, 'For the KOSDAQ market to rebound, a recovery in the biotech sector is necessary.'
* This article has been translated by AI.
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