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Kosdaq roars to 10-year high on biotech boom

South Korea‘s second-tier Kosdaq market hit a 10-year high in its closing mark Monday, riding on a biopharma boom.

Kosdaq closed at 785.32 Monday, up 1.22 percent from the previous session Friday. The index jumped by 16.7 percent for the month.

The closing mark was the highest in over a decade since Kosdaq, designed in its birth to benchmark US’ tech-heavy Nasdaq, closed at 794.08 on Nov. 7, 2007.

A combined market cap of Kosdaq hit an all-time high at 275.5 trillion won ($250.6 billion).

(The Korea Exchange)
(The Korea Exchange)
Both foreign investors and institutional investors net purchased Kosdaq stocks worth 855.5 billion won and 1.85 trillion won, respectively, for the past seven trading days, according to data by the Korea Exchange.

This came after emerging biotech powerhouses in the Kosdaq have shown stellar performances since the market resumed operation on Oct. 10 after 10-day national holiday.

For the past 30 trading days, shares of Kosdaq bellwether and biosimilar maker Celltrion jumped 52.6 percent, while its marketer Celltrion Healthcare, which went public in July, soared 45.4 percent. Clinical-stage cancer drug developer SillaJen, which debuted in December last year, skyrocketed by 185 percent over the cited period.

Also, antirheumatic drugmaker TissueGene surged nearly 50 percent for 11 trading days since its debut on Nov. 6. TissueGene claimed the No. 4 spot on Kosdaq in market cap Monday.

On Monday, six out of 10 top Kosdaq-listed shares in market cap -- Celltrion, Celltrion Healthcare, SillaJen, TissueGene, Medy-Tox and ViroMed -- were biopharma shares.

The biotech momentum, however, is drawing analysts‘ concerns that the shares in the healthcare sector are overrated.

Kim Ye-eun, an analyst at IBK Securities, wrote in a note Monday the rallies of Kosdaq-listed healthcare shares might result in a “deja vu to dot-com bubble,” referring to a series of demise of IT companies in 2000, which hit the tech-heavy Kosdaq market hard.

“Biotech sector on Kosdaq is on the brink of a chasm, and only a few selected firms would be able to cross it,” Kim wrote, quoting US management consultant and author Geoffrey Moore.

Kim added the current biotech-led Kosdaq rally stemmed from elevated investor risk sentiment.

Also in Monday closing, Kospi fell 0.25 percent to close at 2,527.67. Local currency weakened by 3.1 won from Friday, when the dollar was trading below 1,100 won for the first time in nearly 14 months. The greenback was trading at 1,100.6 won in Monday session’s close.

By Son Ji-hyoung