Wuhan virus puts medical plays in spotlight

WITH the outbreak of the Wuhan coronavirus evoking memories of 2003's Sars epidemic, investors are looking to pick Singapore-listed medical plays as regional benchmarks recovered from Tuesday's sell-off.

Three of them - pennies Medtecs International, AsiaMedic Limited and Healthway Medical - accounted for close to a fifth of Wednesday's trading volume of two billion securities or 70 per cent above the 2019 daily average. Total turnover was S$1.09 billion, in line with last year's daily average.

Medtecs was the bourse's most active counter, adding 0.6 Singapore cent or 6.5 per cent to 9.8 Singapore cents on 166.6 million shares traded. The provider of healthcare products and hospital services has surged 88 per cent from Jan 20's close of 5.2 Singapore cents.

Singapore Exchange market strategist Geoff Howie noted the combined turnover on the counter over the past two sessions hit S$30 million. As at end-2019, Medtecs' market capitalisation was S$20 million.

Healthway ended 0.3 Singapore cent or 7.5 per cent higher at 4.3 cents.

Meanwhile, contra traders were likely to have taken profit on AsiaMedic (down 0.2 Singapore cent or 11.1 per cent to 1.6 Singapore cents) after its 40 per cent jump on Tuesday.

Other active sector plays included IHH Healthcare (up six Singapore cents or 3.2 per cent at S$1.94 and Thomson Medical (up 0.1 Singapore cent or 1.6 per cent at 6.4 cents).

IGiven the recent virus outbreak, shares in Malaysian glove makers Top Glove (advanced 13 Singapore cents or 7.6 per cent to S$1.84) and Riverstone Holdings (added 2.5 Singapore cents or 2.5 per cent to S$1.01) continued to make gains.

Citi Research analysts said glove makers could see a surge in sales "should the outbreak continue to deteriorate at a global scale leading to a pandemic, particularly, with (Chinese New Year) around the corner".

Further escalation could however support near-term buying interest, particularly the sector bellwethers like Top Glove, Citi analyst Megat Fais said.

With Chinese officials stepping up containment efforts on the outbreak, Wednesday was a calmer session for Asia's benchmarks, which turned to bargain hunting after the sell-off.

Singapore's Straits Times Index (STI) - which lost 1 per cent on Tuesday - closed at 3,253.93, for a gain of 6.76 points or 0.2 per cent. Across the market, advancers pipped decliners 209 to 205. Nine of the benchmark's 30 counters ended in the red.

Performance on the STI was muted compared to other Asia-Pacific benchmarks, which were similarly on the mend. Australia, China, Hong Kong, Japan and South Korea were comfortably higher. Bucking the trend was Malaysia. Taiwan was closed.

Investors may have taken advantage of picking up stocks at attractive valuations but it is still early days in determining the extent of the outbreak of the Wuhan coronavirus.

If it ends up being labelled an international public health emergency, FXTM market analyst Han Tan noted could result in "further losses in riskier assets while boosting demand for safe havens".

"If the authorities around the world show signs of failing to contain the coronavirus for an extended length of time, that could prompt a sustained risk-off period in the markets," he added.

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