The main thing is health? Not when it comes to the capital market. Although the corona plague returned investors’ spotlight to the shares of health and pharmaceutical companies, the return of global economic activity to routine alongside the corona shifted the spotlight back to real activity.
As a result, some health care companies have not been able to enjoy the warm light of the cash spotlight, whose movement mimics billions of dollars from the value of companies in the field, along with millions of shekels deleted from the value of Israeli companies traded on the Tel Aviv Stock Exchange.
The five largest companies traded in the field in the US lost an average of 15.3% each of the peak value they jumped during the corona, and the five largest Israeli companies in the field and traded on the Tel Aviv Stock Exchange lost an average of 41.7% of the peak value. .
But despite the declines and large write-offs, most companies are still recording highs against the value at which they were traded before the corona, and there are also those who continue to hover up against the backdrop of vaccines.
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“Some healthcare companies have made a handsome return this year,” explains Sergey Vaschonok, a senior analyst at Oppenheimer Investment House.
“But there needs to be a separation between the health investments made in the corona period and the increases experienced by the field companies in that period, and the separation begins with the money invested by the governments and the giant companies in the health field – especially in the US.
“So why did some of the companies get flooded with value? The answer to this is mainly in the index, since some of the investments in the field during the Corona period were made through the purchase of ETFs for the biotech index, and not necessarily an investment in a specific company.
“In this context, it is important to separate the large companies in the field from the small companies, since most of the investors wanted and want to focus on the large companies and the large company-oriented indices. So if you buy a biotech ETF, most money goes to Both, but little.
“To this can be added that hedge funds in the field, which are the main players in the small stocks, did not really function after the start of the corona, and that the biotech sector does not interfere with the real economy.
Uri Hershkovitz – Life Sciences Analyst at Psagot Investment House (Photo: Private)Wheel of declines
“The picture that emerges is not flattering for the biotech and health sector,” adds Uri Hershkovitz, a life sciences analyst at Psagot Investment House, “but it should be remembered that the data show that the rise to the peak was very sharp.
“The American Biotechnology Index (XBI) has tripled since its inception with the onset of the corona plague in early 2020, rising from $ 60 to $ 180 in a short period of time.
Pharma, Bittuk and Biomed Cell Companies (Photo: None)“In addition, the index that affects the pricing of all biotechnology stocks in the world, including in Israel, has been in one of the sharp declines in its history for about a year – about 60%, and this situation has led to sharp declines experienced in biotech funds.
“The declines in the funds led to huge redemptions, which led to forced sales and the continued feeding of the declines. .
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