LG Energy Solution, Foreigners Buy 1 Trillion Won Worth in One Month

'Inflation Reduction Act' Expected to Be the Biggest Beneficiary
Foreign Investors Net Buyers for 28 Consecutive Trading Days
LG Energy Solution Stock Price Rises 21.2%

[Asia Economy Reporter Hwang Yoon-joo] Foreign investors have purchased over 1 trillion KRW worth of LG Energy Solution shares in just over a month. This surge in investment sentiment is interpreted as a response to the expected market share growth in the U.S. energy storage system (ESS) market following the passage of the Inflation Reduction Act (IRA).

According to the Korea Exchange on the 2nd, foreign investors net bought LG Energy Solution shares worth 1.0498 trillion KRW over 28 trading days (from July 25 to September 1). As a result, the stock price rose 21.2%, from 382,000 KRW (July 22) to 463,000 KRW (September 1).

The buying spree in LG Energy Solution shares is attributed to the impact of the U.S. Inflation Reduction Act. The legislation includes measures to support ESS, which is expected to benefit LG Energy Solution.

LG Energy Solution is competing with China's CATL for the top position in the global secondary battery market. In the first half of this year, the company faced a large-scale provision due to recalls related to fires, which, combined with weakened investment sentiment in the secondary battery sector, caused the stock price to stagnate.

[Image source=Yonhap News]

However, the recall issue has been resolved, and the passage of the Inflation Reduction Act has changed the situation. LG Energy Solution is identified as one of the biggest beneficiaries of the IRA.

Jung Yong-jin, a researcher at Shinhan Financial Investment, explained, "The extension of the Investment Tax Credit (ITC) scope and period encourages ESS installations. LG Energy Solution's product portfolio is diversifying with LFP and others, and the possibility of local expansion in North America is opening up, which is expected to increase its market share in the U.S. ESS market."

LG Energy Solution plans to actively engage in North American projects to secure a leading position in the U.S. ESS market. To this end, in February, it acquired 100% of NEC Energy Solutions, a subsidiary of Japan's NEC Group, accelerating its ESS capabilities. Additionally, starting in 2023, the company plans to actively enter the low-cost ESS market using LFP cathode materials to improve product competitiveness.

Researcher Jung stated, "LG Energy Solution is expected to return to profitability in the second half of this year. Local expansion is expected to accelerate, and project-based volume is also anticipated to increase."