Stocks

Shares of 2 Japanese Companies Are Spiking as Coronavirus Spreads

Shares of Japanese companies Kawamoto and Azearth have spiked as the coronavirus spreads. Honeywell and 3M, meanwhile, are ramping up production of masks.

The stocks of Kawamoto and Azearth have appeared to have benefited, while Honeywell and 3M are ramping up production of masks.

The coronavirus has put a damper on the performance of stocks around the world as the respiratory virus has spread across borders. Airlines, energy companies, and multinationals with heavy China exposure have experienced particularly sharp drops. Starbucks (SBUX) has had to shut more than half of its stores in China -- the company’s most important growth area -- amid the outbreak.

There is no vaccine yet. Several biotech companies, including Moderna (MRNA), are working on one. Those stocks have risen on hope that they will find a remedy, though analysts doubt that they can produce a product to stop the current outbreak. Until a vaccine is produced, doctors in China are using other antiviral medicines and traditional Chinese medicines to treat the virus.

Among the items that are in high demand are face masks. Hospitals and pharmacies have been running out of masks during the outbreak. The stock of Kawamoto (3604. Japan), a Japanese medical supply company that makes masks, appears to be reacting to the surge in demand. The stock has jumped 479% this year, experiencing a particularly large spike around Jan. 17 when the outbreak began receiving more attention. Kawamoto, which is traded in Tokyo, remains a small company, worth about 15 billion yen, or about $140 million.

Shares of Azearth (3161. Japan), another Japanese company that makes protective clothing used in hospitals, have also roughly doubled since mid-January.

There has also been a run on face masks in the U.S., where the virus has also begun to spread. Both Honeywell (HON) and 3M (MMM) are ramping up production of masks because of the demand.

“We’re seeing increased demand for our respiratory protection products, and we’re ramping up our production world-wide, in China, around the world to meet that demand,” 3M CEO Michael Roman said on the company’s fourth-quarter earnings call on Tuesday.

For a company like 3M, however, the disease will also hurt its results, because Chinese businesses are shutting down at a time of year when they are usually selling lots of 3M products. Both 3M and Honeywell stocks have fallen since the virus began to spread. Although both sell face masks, they have wide-ranging business operations, and the coronavirus poses dangers to industrial companies.

Write to Avi Salzman at avi.salzman@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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