Is Asia’s Antiviral Stock Boom Just a Temporary Trend?

As temperatures soar above 37 degrees Celsius in Asia, a new concern arises – is it a fever or heatstroke? Concurrently, a surge in Covid infections grips the region, prompting a heightened demand for antivirals and testing kits. The Editor of the FT, Roula Khalaf, handpicks her favorite stories in the weekly newsletter, shedding light on the current situation.

1. Current Covid Situation in Asia:
   • New Covid variants have led to a spike in infections in countries like Japan and South Korea.
   • Hospitalizations due to Covid have skyrocketed in South Korea, increasing sixfold in the past month.
2. Impact on Healthcare and Companies:
   • Pfizer’s Paxlovid and Merck’s Lagevrio are the oral antiviral treatments of choice for patients over 60 in South Korea.
   • Local companies in Asia specializing in Covid-related products are experiencing a surge in stock value, including test kit manufacturers, antiviral suppliers, and mask makers.
   • Japanese drugmaker Daiichi Sankyo and South Korea’s Shin Poong Pharmaceutical have seen significant gains in their market value.
3. Economic Outlook for Ancillary Sectors:
   • Test kit sales at convenience stores have more than doubled, indicating a prolonged boost for companies in the Covid-related market.
   • Vaccine and face mask producers are also benefiting from the increased demand, with companies like SK Bioscience and KM Corp witnessing notable growth in recent days.

The impending return of students to school could potentially exacerbate the Covid situation, as respiratory viruses often spread during this time of year. However, the increase in test kit and mask sales may provide a longer period of sustainability for these companies. Despite the temporary boost, the volatile nature of the industry, closely tied to sudden spikes in Covid cases, remains a key risk factor for investors.

As the situation unfolds, it is essential to monitor the trends in the market carefully and make informed decisions. The uncertain nature of the pandemic highlights the need for vigilance and adaptability, both on an individual and corporate level. Stay informed and stay safe.

For more insights and updates, follow The FT Editor’s Digest.