Pharmaceutical Issuer Stock Prices Fall After Jokowi Vaccines, Analyst: Euphoria Triggers Profit Taking Action
President of the Republic of Indonesia Joko Widodo (Jokowi) when vaccinated against COVID-19, at the State Palace, Wednesday, January 13, 2020 (Photo: Press Bureau of the Presidential Secretariat)

JAKARTA - Stock prices of pharmaceutical issuers plunged on Wednesday, January 13, despite positive sentiment in which the Food and Drug Administration (BPOM) gave the green light for the emergency use of the COVID-19 vaccine made by Sinovac, a pharmaceutical company from China.

In fact, on the same day President Joko Widodo (Jokowi) was the first person to be injected along with his staff at the State Palace, political figures to artist Raffi Ahmad. All went well, but this positive sentiment did not encourage pharmaceutical stocks to accelerate.

Based on data from the Indonesia Stock Exchange (IDX), there was a correction in pharmaceutical stocks amid the Jakarta Composite Index (IHSG) in the green zone. The JCI grew positively because it responded to the news about the vaccination, and it was even observed that it shot up 0.62 percent.

President of the Republic of Indonesia Joko Widodo (Jokowi) when vaccinated against COVID-19, at the State Palace, Wednesday, January 13, 2020 (Photo: Press Bureau of the Presidential Secretariat)

Of the 7 pharmaceutical listed companies and their supporting sectors, all transactions were observed in the red zone. In fact, all of them fell to the lowest level allowed by the exchange, aka bottom auto reject (ARB).

The worst correction was recorded by a pharmaceutical issuer with the largest market capitalization on the stock exchange, namely PT Kalbe Farma Tbk (KLBF), which corrected 6.85 percent. Followed by two Bio Farma subsidiaries, namely PT Indofarma Tbk (INAF) and PT Kimia Farma Tbk (KAEF), also forced to fall, both shares were corrected by 6.81 percent.

Then, PT Pyridam Farma Tbk (PYFA) also fell by 6.76 percent. Furthermore, the syringe issuer, PT Itama Ranoraya Tbk (IRRA), was corrected by 6.76 percent.

There is Overvalue and Profit Taking

Binaartha Sekuritas analyst M Nafan Aji Gusta Utama said that the drop in stock prices of pharmaceutical companies was caused by several factors, namely overvaluation and profit taking.

Nafan said, profit taking occurs because of euphoria in the community. That is, when the vaccine comes, the stock price will skyrocket, then the government plans the vaccination, this will create more euphoria in the community, so that the stock price soars.

However, when the stock price was at its highest, many investors gave up their share ownership. Because you want to make a profit. This makes the pharmaceutical stock price flushed.

"Profit-taking in the pharmaceutical sector has occurred. If it is said (there was) the increase was due to euphoria of the arrival of the vaccine from China Sinovac," he said, when contacted by VOI, Wednesday night, January 13.

Furthermore, Nafan said, the euphoria of the significant increase in share prices actually opened opportunities for profit taking. According to him, this is actually a reasonable output.

"Naturally, profit taking occurs in the capital market, causing the stock price to return to equilibrium, so there is a balance between supply and demand," he said.

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Nafan said, later the stock price movement will also move up relatively again. However, the movement needs to be supported by positive sentiment. This is because positive sentiment can affect stock price movements.

Kimia Farma (KAEF) shares plunged 6.81 percent in trading Wednesday, January 13. (Photo: RTI)

"Later while waiting for the end of last year report or dividends, or the extent to which the dynamics of the mass vaccinations are running in Indonesia and abroad, as well as for example the first quarter financial statements of 2021. So that will affect the movement of pharmaceutical stock prices," he said.

According to Nafan, for the performance of pharmaceutical stock issuers, the opportunity to increase product sales is still very high, considering that currently the COVID-19 pandemic is still ongoing.

"Products of medical devices, medicines including vaccines remain wide open (increasing) in my opinion. Along with the economic recovery," he explained.

Actually, Nafan said, the redemption of 7 pharmaceutical stock issuers could also be influenced by the news about the efficacy of the Sinovac vaccine in Brazil which had fallen to 50.4 percent to prevent infection, far below the percentage announced last week.

Last week, Brazilian researchers celebrated results showing 78 percent efficacy or efficacy against "mild to severe" cases of COVID-19, a level they later described as "clinical efficacy."

Illustration of the COVID-19 vaccine. (Photo: Unsplash)

For your information, quoted by Reuters, scientists and observers have criticized the Butantan biomedical center for releasing some of the data last week which resulted in unrealistic expectations.

The incremental disclosure of China's vaccine trials globally has raised concerns that the trials are not subject to public scrutiny as is being done in the US and Europe.

Researchers in Butantan themselves delayed announcing their results three times, blaming the confidentiality clause in the contract with Sinovac.

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