"Growth Potential Remains" Despite Stock Adjustment, Individuals and Foreigners Accumulate 2nd Battery Stocks

Foreigners Buy Samsung SDI the Most
POSCO, LG Chem, and LG Energy Solution Rank High

[Asia Economy Reporter Myunghwan Lee] Amid the recent decline in the stock prices of major secondary battery-related stocks listed on the domestic stock market this month, individual and foreign investors have been buying large quantities of these stocks. Securities firms have diagnosed that considering the business conditions of the secondary battery industry, the growth potential of related companies is significant.

According to the Korea Exchange on the 14th, from the 1st to the 13th of this month, foreign investors purchased Samsung SDI the most on the domestic stock market. During this period, foreign investors net bought over 170.3 billion KRW worth of Samsung SDI shares. Posco Chemical, a secondary battery materials company, ranked second in net purchases by foreign investors following Samsung SDI. In addition, other secondary battery-related stocks such as LG Chem (8th), LG Energy Solution (13th), and Yulchon Chemical (14th) were also among the top net purchases.

Considering that foreign investors have been net sellers in the domestic stock market this month, the net buying trend centered on secondary battery stocks stands out even more. From the beginning of this month to the 13th, foreign investors sold stocks worth 1.44 trillion KRW across KOSPI, KOSDAQ, and KONEX markets, showing the only selling trend among investor groups.

Individual investors also included secondary battery-related stocks in their portfolios. LG Chem ranked 4th with net purchase transaction value of 203.4 billion KRW, followed by LG Energy Solution (5th), EcoPro BM (7th), and EcoPro (9th), all making it into the top 10 net purchase stocks. Expanding the range to the top 20 net purchases, eight of them were secondary battery-related stocks.

Recently, the stock prices of secondary battery-related stocks have been sluggish. Due to uncertain earnings forecasts, these stocks have undergone price adjustments. Not only large secondary battery manufacturers like LG Energy Solution and Samsung SDI but also some secondary battery materials companies such as EcoPro BM have shown weakness since the end of last month.

The weakness in the secondary battery sector is largely attributed to the outlook that Tesla, the American electric vehicle manufacturer, may reduce production at its Shanghai plant by 20% starting in December due to weak demand in China. This concern has expanded to the entire electric vehicle sector's demand slowdown, and domestic secondary battery-related stocks have not been spared. Tesla's market capitalization briefly fell below 500 billion USD (approximately 649 trillion KRW) during trading on the 13th (local time), amid 'CEO risk' concerns that Elon Musk has been neglecting Tesla management following his acquisition of Twitter.

However, securities firms maintain a positive outlook on the growth potential of the secondary battery sector itself. From a long-term perspective, supply may fall short of demand for secondary batteries. Seokhwan Shin, a researcher at Daishin Securities, predicted, "Because demand is increasing faster than the global battery production capacity (CAPA) expansion, a battery supply shortage is expected to occur in 2024-2025." He added, "The secondary battery industry has entered a boom phase beyond the growth stage, and the growth momentum of the domestic secondary battery value chain still exists."