Mitigation of Concentration in Secondary Battery Stocks, the Epicenter of Increased Stock Market Volatility

Samsung Electronics Tops Individual Net Purchases Last Week... POSCO Ranks Second
Secondary Battery Stocks Disappear from Foreign Investors' Portfolios
Healthcare and China-Oriented Consumer Themes Gain Attention... Secondary Battery Stock Supply-Demand Battle Expected to Continue

The concentration of secondary battery stocks, which had been identified as the source of increased stock market volatility, is gradually easing. Recently, individual investors who held the most shares of POSCO Holdings have been shifting to Samsung Electronics this month. In foreign investors' portfolios, Ecopro BM and Ecopro, which were being bought for short covering (repurchasing to cover short sales), have disappeared.

According to the Korea Exchange on the 14th, the stock most net purchased by individuals last week was Samsung Electronics. Individuals net purchased Samsung Electronics by 323.5 billion KRW. POSCO Holdings followed closely with 319.7 billion KRW. Looking at trading trends over the past four weeks, POSCO Holdings was the top net purchase for individuals for three consecutive weeks. However, last week, POSCO Holdings ceded the top spot to Samsung Electronics and fell to second place. Since July, individuals had been focusing on realizing profits from Ecopro and Ecopro BM while heavily buying POSCO Holdings. Over the past month, individuals net purchased POSCO Holdings by 4.9339 trillion KRW. During this period, individuals net purchased 5.1145 trillion KRW in the KOSPI market. Most of the net purchases in the KOSPI market were concentrated in POSCO Holdings. Conversely, Ecopro BM was sold off by 1.0454 trillion KRW, and Ecopro by 833.4 billion KRW, respectively.

Individuals are still buying secondary battery stocks. However, a rotation pattern among stocks is emerging. During the week of July 31 to August 4, POSCO Holdings, LG Chem, Samsung SDI, Ecopro, and LS were among the top 10 net purchases, but last week, only POSCO Holdings, Kumyang, and LG Chem made it into the top 10.

Changes have also appeared in foreign investors' portfolios. Due to short covering, Ecopro BM and Ecopro ranked first and second in foreign net purchases during the two weeks from July 17 to 28, but since then, they have disappeared from the top net purchase rankings. Last week, foreign investors net sold Ecopro by 1.9 billion KRW.

Lee Kyung-min, a researcher at Daishin Securities, analyzed, "The characteristic of the secondary battery concentration phenomenon is the extremely divergent supply and demand situation between foreign and individual investors," adding, "Individual demand concentrated on secondary batteries, and foreign and institutional investors joined in with short covering purchases, causing a sharp rise and intensifying the concentration phenomenon."

As individual demand disperses and foreign short covering subsides, the concentration phenomenon in secondary battery stocks appears to be easing. With the easing of the secondary battery concentration, a thematic stock market is emerging. Following the recent surge in superconductor-related stocks, Chinese consumer-related stocks have also surged. Last week, institutions bought Hotel Shilla the most, and foreign investors also held Hotel Shilla as their second-largest holding after Samsung Electronics. Choi Yoo-jun, a researcher at Shinhan Investment Corp., said, "In the pattern where secondary batteries, shipbuilding, artificial intelligence (AI), and robotics themes alternately rose, healthcare and China-oriented consumer themes have recently gained attention," adding, "Especially because the profit turnaround story is simple and clear, China-oriented consumption can emerge as a new theme."

Secondary battery stocks are expected to continue facing supply and demand battles. Han Ji-young, a researcher at Kiwoom Securities, said, "As experienced frequently since the end of July, the 'FOMO (Fear Of Missing Out)' phenomenon in secondary battery stocks has not completely disappeared, so this week as well, supply and demand battles will unfold with oversold perception buying, profit-taking, or stop-loss selling," adding, "During this process, whether the displaced demand will move to the bio sector, which is trying to re-emerge as a leading sector in KOSDAQ, or return to leading thematic stocks such as cosmetics, duty-free, and casinos related to China's reopening (resumption of economic activities) will be a key point to watch during the week."