Vaccine's Arrival: Local Pharmaceutical Stocks Tumble?
The long-awaited COVID-19 vaccine injection was finally conducted by President Joko Widodo, on Wednesday (1/13) at the Jakarta Presidential Palace. Sinovac Biotech Ltd’s product was Indonesia’s preferred choice for vaccine. After a couple of greetings early on, Joko Widodo received the first injection of the vaccine. Aside from the President, a number of ministers and several prominent figures from state institutions also received the injection. Highly influential characters, namely Daeng Faqih (Chairman of IDI), Dr. H. Amirsyah Tambunan (General Secretary of MUI/Muhammadiyah), Budi Gunadi Sadikin (Health Minister), and Raffi Ahmad (Youth Representative) were some of the plenty. Indonesia’s current Health Minister, Budi Gunadi, assured that vaccines are beneficial for the country’s future as stated by his claim: "With the permission from the President, we have started a national vaccine program. To my friends, the Indonesian people, this vaccine is a tool that can be used to protect ourselves. More importantly, this vaccine is also used to protect our families, our neighbors, protecting the Indonesian people and protecting human civilization," as Budi announces his speech at the Palace complex, Jakarta, Wednesday (1/13).
Despite the positive sentiment of the approval from BPOM (Food and Drug Administration) to distribute the use of the vaccine Covid-19 Sinovac, stock prices in the pharmaceutical sector dropped drastically on the market during the same day. IDX (Indonesia Stock Exchange) reported that there was a correction in pharmaceutical stocks. It was observed that all 7 pharmaceutical companies listed (PYFA, IRRA, KAEF, INAF, PEHA, TSPC, KLBF) and their supporting sectors were transacted in the red zone. Even worse, all of them fell to the lowest level allowed by the stock exchange. The worst correction was recorded by the largest market capitalization pharmaceutical issuer, namely PT Kalbe Farma Tbk (KLBF), which corrected 6.85% to the level of Rp 1,565 / unit. Furthermore, the duo of Bio Farma's subsidiaries, namely PT Indofarma Tbk (INAF) and PT Kimia Farma Tbk (KAEF) were also forced to fall, both shares were corrected by 6.81%. It was observed that PT Pyridam Farma Tbk (PYFA) also fell by 6.76% to a level of Rp. 1,380 / unit. Meanwhile, the syringe issuer, PT Itama Ranoraya Tbk (IRRA), was corrected by 6.76% to a level of Rp 3,450 / unit. Director of Anugerah Mega Investama, Hans Kwee, said that the weakening of KAEF and INAF shares that occurred after the first injection of the Covid-19 vaccine on Wednesday (1/13) was driven by the sell by news sentiment. Sell by news refers to the majority of market players' projections to sell certain shares based on speculation or rumors, thus causing the stock price to fall.
On the contrary, before the pharmaceutical shares plunged following the initial vaccine injections, two subsidiary pharmaceutical shares of PT Biofarma (Persero), namely PT Indofarma (Persero) Tbk (INAF) and PT Kimia Farma (Persero) Tbk (KAEF), surged upon the closing of trading on Monday (1/11). INAF's shares closed up 25% to Rp 6,250 / share on Monday's trading. Meanwhile, KAEF shares closed up 20% to Rp 6,45 / share. The total transaction value of INAF on Monday reached Rp 296.2 billion, with the volume of shares traded reaching a massive 51.19 million shares. Meanwhile, the entire transaction value of KAEF's shares reached Rp 820 billion, with the volume of shares traded reaching 135.06 million shares. How about IHSG's performances? Mirae Asset Sekuritas believes that this year's IHSG will reach a psychological level of 6,880. The increase in the IHSG will mainly be fueled by various positive sentiments such as the COVID-19 vaccination, economic improvement, and foreign capital inflow to the domestic exchange. "The vaccination execution makes investors optimistic that the increase will continue this year," Harriyanto Wijaya - Mirae Asset Sekuritas Head of Research noted on Wednesday (1/13). All in all, the initial COVID-19 vaccine injection is a turning point in resolving the pandemic, which will also construct the capital market in the upcoming times.
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