HCA Biosnack update: Biotech and Life Science stocks outperform as the general stock market moves to record highs.

After a slow start to 2024, February and the beginning of March turned out to be a very strong period for Biotech and Life Science stocks as illustrated above. Even more so, if measured since late October 2023. Looking at 2024, the general S&P Biotech index is now up 7.7 percent year-to-date, outperforming MSCI World All Countries which is up 7.0 percent. Nordic focused HCA Little Mermaid index is up 6.0 percent.

The catch-up by Biotech and Life Science stocks has been long awaited – and well deserved according to some – but measured longer term since the beginning of 2023, Biotech and Life Science stocks have still underperformed the general stock market. This is even after the rally in Biotech and Life Science stocks since late October 2023, where Biotech and Life Science stocks are up approximately 50 percent, more than double the increase in MSCI World All Countries.

The positive resurgence of Biotech and Life Science stocks comes at a time when macroeconomic data continues to be relatively strong, in particular inflation data, which has lowered expectations when central banks will lower interest rates and by how much. Lower interest rates would otherwise often be the sort of contributing trigger that is required for risky assets to move up, but Biotech and Life Science stocks have moved up irrespectively.

If Biotech and Life Science stocks can move up 50 percent in a few months, while sector challenges remain and still missing normal market triggers, it illustrates the extreme negative sentiment we are coming from. Some would suggest it is just mean reversion taking place, which is almost by definition temporary in nature.

The big question is whether the recent increased appetite for risk assets like Biotech and Life Science stocks is indeed, just temporary, or if it is the beginning of a longer period of a more constructive sentiment towards the sector in general. Or if there are circumstances that suggest only some (type of) Biotech and Life Science stocks will continue to move up.

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Disclaimer: HC Andersen Capital receives payment from all companies for a Digital IR/Corporate Visibility subscription agreement. /Claus Thestrup 9:30 AM 14-03-2024.