Why 5 tiny ASX stocks have soared because of the Coronavirus
We examine how the Coronavirus (COVID-19) kick-started a massive run-up in the share prices of 5 unique Aussie small-caps.
Money can’t make you happy
On 3 March, the US Federal Reserve announced an emergency rate cut of 50 basis points.
This was of course an attempted ‘fix’ to the unfolding Coronavirus crisis.
‘In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate,’ the Fed elaborated.
US markets fell sharply in response, with the NASDAQ and S&P500 giving up the gains they recorded during the day.
This comes after the Reserve Bank of Australia cut interest rates by 25 basis points on Tuesday, taking the official cash rate to 0.50%. Like the US Fed, the RBA’s decision was motivated by the Coronavirus outbreak.
Top 5 small-caps benefitting from the Coronavirus
Besides policy intervention from central banks, in the last couple of months a number of ASX listed companies – mainly in the health space or adjacent – have come out touting some sort of solution and/ or form of assistance with the Coronavirus crisis.
Unsurprisingly, the share prices of these companies have run-up significantly (and quickly), amidst a flurry of lofty news announcements. With that in mind, below we look at some of the most prominent Australian stocks involved either directly or indirectly in the creation of these solutions:
Eagle Health Holdings
*Data correct prior to the market open 4 March.
You can go LONG or SHORT on any of the above stocks with an IG Trading Account. Find out more here.
Zoono share price +136%
Maybe the most prominent ASX company offering its support to the Coronavirus crisis; Zoono is centrally involved in the production of antimicrobial sprays and wipes that kill a variety of pathogens, including: viruses, bacteria, mould and fungi.
Hype around the company initially built after Zoono revealed that its Microbe Surface Sanitiser and Hand Sanitiser products had been sent to a Germany laboratory to test their effectiveness against the Coronavirus (COVID-19) strain.
The stock rose in response to that first announcement and continued to run higher after it was more recently announced that the results from the German lab showed:
‘That Zoono's Z-71 Microbe Shield (the same Zoono technology used in Zoono hand sanitiser) is >99.99% effective against COVID-19.’
Uscom share price +186%
Unlike the other companies on this list, Uscom specialises in non-invasive cardiovascular and pulmonary monitoring devices. This is of vital importance, because as the company points out, COVID-19 'patients die from cardiovascular pulmonary failure.'
Moreover, investors were likely pleased after the company noted in a recent presentation that its USCOM 1A has been specifically and generally ‘included in China National Health and Medical Commission Guidelines for treatment of severe coronavirus patients in adults and children.'
China has currently reported 92,880 cases of COVID-19.
Aeris Environmental share price +55%
Like Zoono, Aeris produces disease fighting disinfectants.
Positively, the company announced on 27 February that 'the Singapore National Environmental Agency (NEA) that that its proprietary hospital-grade disinfectant with residual, Aeris Active, has been added to a list of approved general products for the disinfection of COVID-19.'
In response to the unfolding Coronavirus situation, the company said that it is scaling up production, to meet 'the growing demand in China and the APAC region.’
Biotron share price +38%
As a specialist in drugs targeting viral diseases, Biotron has risen to prominence in the last few weeks after announcing that the company would evaluate its 'compounds for activity against coronavirus'.
These compounds, noted the company ‘can reduce the levels of coronavirus by 90 - 100% in infected cell cultures.’
Biotron is currently in the process of testing the effectiveness of these compounds against the Coronavirus (COVID-19) strain, updating investors in late-February that these tests are 'progressing as quickly as possible.'
Eagle Health Holdings share price +54%
Unlike the other companies discussed above, Eagle Health's stock has been bid up, not due to the creation of a specific medical solution, but likely because of a key distribution agreement between the company and Zoono.
As part of this agreement, the company will be responsible 'for the bulk import of Zoono's formulations to its wholly owned GMP certified pharmaceutical facility in Xiamen China, where Eagle will carry out the labelling, packaging and distribution into Eagle's extensive existing channels.'
How to trade the unfolding situation
What are your thoughts? Are these stocks all hype or are they the real deal?
You can trade any of the stocks we have highlighted above, utilising CFDs, through IG’s world-class trading platform right now. For example, to buy (long) or sell (short) Zoono using CFDs, follow these simple steps:
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