Has the Secondary Battery Market Hit Bottom? Secondary Battery ETF Returns 'Soar'

Secondary Battery ETF Records Solid Returns
Demand Concerns That Suppressed Secondary Battery Stock Prices Gradually Expected to Ease
Expectations of Demand Increase Also Reflected Due to US Interest Rate Cuts

This year, secondary battery stocks, which had been sluggish, have recently shown strength, leading secondary battery exchange-traded funds (ETFs) to record favorable returns. As the environment that had suppressed secondary battery stocks gradually improves, attention is focused on whether secondary battery ETFs will hit their lows and continue their rebound.

According to the Korea Exchange on the 25th, secondary battery ETFs have shown a strong performance this month, ranking among the top in returns. KODEX Secondary Battery Industry Leverage rose 14.23% this month, ACE Tesla Value Chain Active increased by 11.91%, BNK Secondary Battery Anode Material by 10.94%, TIGER Secondary Battery TOP10 Leverage by 10.51%, and RISE Secondary Battery TOP10 by 10.02%, all achieving double-digit returns. In addition, many other secondary battery-related ETFs have occupied the top ranks in ETF returns, showing signs of recovery from previous sluggishness.

The recent strength of these secondary battery ETFs is interpreted as a result of the gradual improvement in the previously negative environment surrounding secondary battery stocks. As overall electric vehicle sales in key markets for Korean companies, such as Europe and the United States, bottom out, excessive concerns about demand are expected to be gradually alleviated.

In Europe, although electric vehicle sales are inevitably sluggish this year, sales are expected to increase again next year due to base effects and other factors. Byung-hwa Han, a researcher at Eugene Investment & Securities, said, "Electric vehicle sales in Europe in August dropped sharply by 32% compared to the previous year, but cumulative sales up to August decreased by only 4% year-on-year." He added, "At this rate, annual sales are expected to decline for the first time ever this year. However, in 2025, European sales are expected to return to a growth trend." Han cited factors for the increase in European sales next year, including the base effect from this year's poor sales, expansion of new electric vehicle models to avoid carbon dioxide emission regulations, and expanded electric vehicle support policies in major countries such as Germany. He explained, "Especially if the recently reported subsidy for purchasing electric vehicles after scrapping old vehicles in Germany is confirmed, the possibility of a market turnaround will increase. Although the scale of subsidy revival needs to be confirmed, it is certain that the German market will enter a growth phase from next year, which will enhance the overall investment attractiveness of K-battery."

In the United States, electric vehicle sales are expected to continue strong. Electric vehicle sales in the U.S. in August increased by 20% compared to the same period last year. Dong-jin Kang, a researcher at Hyundai Motor Securities, said, "U.S. electric vehicle sales in August grew 19.1% compared to the previous month, marking the highest monthly sales ever." He added, "Tesla, which had been experiencing negative growth year-on-year, grew 10.8% year-on-year due to increased Cybertruck sales and the effect of the new Model 3. Tesla's sales growth will accelerate the growth of the U.S. electric vehicle market." He further noted, "Recently, automobile manufacturers (OEMs) have been expanding electric vehicle sales through aggressive incentive strategies starting from the third quarter of this year, when the battery price effect is being felt, so strong sales are expected to continue."

Tesla's third-quarter performance is also expected to be strong this year. Investment bank Barclays forecast Tesla's third-quarter deliveries to reach about 470,000 units. This figure exceeds the market's average estimate and represents an approximately 8% increase compared to the same period last year. Following Tesla's favorable performance outlook, secondary battery stocks showed simultaneous strength the previous day. LG Energy Solution rose 4.03%, Samsung SDI increased by 2.24%, SK Innovation by 6.45%, POSCO Future M by 4.58%, EcoPro BM by 6.38%, and EcoPro by 8.94%, respectively.

Recently, the U.S. interest rate cut has also been a positive factor for secondary batteries, due to expectations of improved demand resulting from the rate cut. Hye-young Jeon, a researcher at Daol Investment & Securities, said, "Although the recovery in demand is not yet visible in numbers, expectations for a demand bottom in the third quarter are being reflected."