Among the top performers is Chinese Covid test maker Daan Gene Co, which has jumped 17% this week. In Japan, drug-maker Daiichi Sankyo Co rose as much as 5.6%, the most in about a week, while South Korea’s Shin Poong Pharmaceutical Co pared gains after a five-session 71% rally.

These companies have re-emerged as investor darlings amid a spike in Covid cases in the three eastern Asian countries since last month, as high temperatures and the Summer Olympics in Paris led to more indoor gatherings.

Positivity rates for the coronavirus have ticked up since the end of June, though the illnesses caused by the resurgence remain mostly mild, according to data from the Chinese Center for Disease Control and Prevention. The virus circulating in the country are still subvariants of omicron, including JN.1 and XDV.

Still, some analysts say the sector is unlikely to see an extended boom like the one witnessed in 2020, given the slim chances for such regional outbreaks to evolve into another global pandemic.

“Covid prevalence has been recurrent for a few times in the past two years and each time the related stocks would experience short-lived outperformance but then it cooled down,” said Minyue Liu, an investment specialist for Asian and Greater China equities at BNP Paribas Asset Management. “Many of these companies are small-to-mid sized companies with low trading liquidity.”

Covid-related products account for less than 10% of all healthcare sales in China, Liu said, adding that the latest rise in demand is unlikely to have a huge boost for earnings.