Moderna-led Bio Rally Driven by Interest Rate Cuts and US Government Policy

Following SK Hynix's announcement of a 40 trillion won treasury stock cancellation, foreign capital flowed in, which is analyzed as short squeeze-driven repurchases by investors who recently engaged in short selling. Concurrently, the resolution of the national pension fund's stock allocation limit issue expanded purchasing power, acting as a positive factor. Lee Hyo-geun, an expert, diagnosed that major semiconductor companies like Samsung Electronics and SK Hynix are addressing market supply-demand gaps through shareholder return policies.

Lee Hyo-geun, an expert, predicted that the stock market is highly likely to rise for three months in August, September, and October. However, he stated that the market situation after the US presidential election in November is difficult to predict and advised caution in investing. This suggests that policy uncertainty could increase depending on the election results.

The US government's direct bond buybacks are analyzed as an attempt to artificially lower government bond yields and stimulate the market. This is a strategy where the government directly intervenes to induce an interest rate cut effect when there is a lack of entities to purchase bonds. As interest rates fall, the stock market tends to rise alongside it, leading Lee Hyo-geun, an expert, to evaluate this as a policy aiming for a 'two birds with one stone' effect.

The biotech sector is drawing attention due to news of a high success probability for Moderna's developing cancer vaccine. As Moderna is an RNA-related company, interest in biotech stocks possessing RNA technology is expected to increase. Lee Hyo-geun, an expert, emphasized that biotech stocks have a close correlation with interest rates, so interest rate indicators must be closely monitored when investing.

The market tended to interpret the results of the recently released employment report as a basis for interest rate cuts. Lee Hyo-geun, an expert, raised the possibility that the government might be creating an artificial interest rate policy trend by methods such as adjusting employment figures. This is interpreted as an intention to prevent interest rate hikes and foster an interest rate cut atmosphere, thereby positively impacting the overall market, including biotech stocks, which were on the rise at the time.

With the confirmed commitment to managing US 10-year Treasury yields, expectations for interest rate stability are growing for the next three months (August-October). This trend of interest rate cuts, combined with new drug achievements like Moderna's cancer vaccine development, is expected to create a favorable environment for the biotech sector. Lee Hyo-geun, an expert, analyzed that these two key points will operate simultaneously to drive biotech stocks.

When selecting biotech stocks, the possession of RNA platform technology and cancer-curing related new drugs are key criteria. Lee Hyo-geun, an expert, cited RNA technology and cancer-related new drug development capabilities as the core points of the Moderna rally. Technology types are diverse, including protein expression (Moderna), degradation inhibition (OliX Pharmaceuticals), and gene editing (Rznomics), and investors should compare and analyze each stock's portfolio for investment.

Most biotech companies tend to rely more on expectations for new drug development than on stable earnings. Lee Hyo-geun, an expert, pointed out that these companies are putting everything on one new drug, making their financial structures very vulnerable. Due to this characteristic, the biotech sector is challenging to trade, and market supply and demand, rather than corporate fundamentals, act as a major variable in stock price determination.

Alteogen is expected to receive stock price momentum from news of Moderna and Merck's collaboration. In particular, Alteogen's position as Merck's partner for the Keytruda SC (subcutaneous injection) formulation is highlighted, which is expected to attract market demand. Alteogen is pursuing a transfer of listing from KOSDAQ to KOSPI, which is interpreted as a strategy to enhance corporate value and secure stable investment. Although there is a gap between securities firms' target prices and market expectations, it is analyzed that stock price volatility could be significant depending on the momentum.

Valuation of biotech companies is highly fluid, and the importance of market environment and supply/demand is emphasized more than typical fundamental analysis. Lee Hyo-geun, an expert, pointed out the phenomenon where supply and demand dominate stock prices through cases like HLB, advising that for biotech stocks, market trends and investor sentiment should be prioritized over technical analysis or appropriate stock price calculation. This means understanding the specific characteristics of biotech investment is crucial.

With the start of mass production of LNF's LFP battery cathode materials from the third quarter of this year, significant growth in the ESS (Energy Storage System) industry is anticipated. Lee Hyo-geun, an expert, predicted that the ESS era would officially begin once mass production starts. While the electric vehicle sector is expected to show a gradual recovery from its Q3 low, the ESS industry is projected to experience rapid growth starting in the second half of the year.

Lee Hyo-geun, an expert, presented ShinSung ST as a key ESS-related stock. ShinSung ST is a company that manufactures battery cases and busbars, and is shifting its revenue structure from being primarily electric vehicle-focused to the ESS sector. It is actively responding to the growth of the ESS era by expanding its US factory, among other efforts, and is therefore evaluated as having significant future growth potential.

With news that Samsung Electronics' foundry prices have increased by up to 15%, expectations for a turnaround in the foundry sector are growing. Lee Hyo-geun, an expert, emphasized that Samsung Electronics must go through Nepes, which possesses WLP (Wafer Level Package) packaging technology, to perform foundry operations, and therefore Nepes should be noted. He also mentioned the possibility of a 'ten-bagger' (10-fold increase) from a long-term perspective by year-end.

Lee Hyo-geun, an expert, predicted that a vibrant market would continue until the US midterm elections in November. However, he warned that due to the immense US fiscal deficit and debt issues, market volatility could expand after these three months, so caution should be exercised in investing. He emphasized the need for a cautious approach to the market situation after year-end.