Korean ETFs chase heavy gains on weight-loss drugs

Mirae Asset, Samsung Asset and KB Asset all started trading healthcare exchange-traded funds, hoping to coast on Novo Nordisk and Eli Lilly.

A 0.25 mg injection pen of Novo Nordisk's weight-loss drug Wegovy [REUTERS/YONHAP]

As the weight-loss drug boom continues to drive an investor buying spree worldwide, Korean financial firms are jumping on the bandwagon with the launch of healthcare exchange-traded funds (ETF).

The local ETF sponsors have set their eyes not only on Novo Nordisk and Eli Lilly, the two dominant front-runners in the market estimated to reach $100 billion in value by 2030, but also on potential game-changers, including Viking Therapeutics, a U.S. drugmaker that has spurred the latest investor rally.

On Thursday, Mirae Asset Global Investments’ new ETF tracking heavyweights in the anti-obesity treatment market began trading on Korea’s main Kospi bourse.

The TIGER Global Obesity Treatment Top 2 Plus ETF counts Denmark’s Novo Nordisk and U.S.-based Eli Lilly as its top holdings, each representing 28 percent.

The eight remaining constituents of the portfolio include other major pharmaceutical companies, such as Merck with a weightage of 9.79 percent, Novartis at 7.04 percent, and Roche Holding at 6.53 percent.

These global pharma giants generate revenue in the anti-obesity sector or are engaging in the research and development of novel weight-loss drugs, according to Mirae Asset.

“In the anti-obesity treatment sector, it is crucial to invest in the market leaders, namely Eli Lilly and Novo Nordisk, as well as big pharma, which are likely to end up as winners with their deep pockets,” said Song Min-gyu, head of the fixed income, currency, and commodity ETF operation team at Mirae Asset Global Investments.

Samsung Asset Management launched Korea’s first ETF tracking anti-obesity drugmakers on Feb. 14.

The Kodex Global Obesity Treatment TOP2 Plus ETF’s top holdings are Eli Lilly, Novo Nordisk, Zealand Pharma and Viking Therapeutics. Viking Therapeutics, in particular, accounts for 19.85 percent of its total assets as of Thursday.

The share price of Nasdaq-listed Viking skyrocketed by 121 percent in the market on Tuesday, as its potentially best-in-class drug candidate GLP-1 — or glucagon-like peptide 1 agonist that mimics the hormone’s appetite control function — proved effective in spurring weight loss during clinical studies.

Investors are expecting that Viking Therapeutics’ drug may break the duopoly of Novo Nordisk’s Wegovy and Eli Lilly’s Mounjaro.

Riding on the soaring stock prices, Samsung Asset Management’s obesity ETF ranked highest in terms of rate of return among all ETFs at 18.1 percent over the past two weeks since the listing, according to the firm Thursday.

The Kodex Global Obesity Treatment TOP2 Plus ETF had net assets of 53. 4 billion won ($40.7 million), and closed at 11,985 won, up 1.96 percent from the previous trading day, on Thursday.

KB Asset Management launched its own obesity treatment ETF on Tuesday, also counting Eli Lilly and Novo Nordisk as its leading holdings. Its KBSTAR Global Obesity Treatment TOP2 Plus ETF had net assets worth 7.9 billion won as of the latest trading day.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]