Secondary Battery ETFs Recorded the Lowest Returns Last Month
Sharp Decline in Secondary Battery Stocks Due to Ongoing Industry Slump and Resumption of Short Selling
Uncertainty Expected to Continue Through April
Secondary battery exchange-traded funds (ETFs) recorded the poorest returns last month. The stock prices of secondary battery companies have struggled due to the combination of the electric vehicle chasm (temporary demand stagnation) and the resumption of short selling. Experts predict that uncertainty surrounding secondary battery stocks will remain high through this month due to the resumption of short selling.
According to the Korea Exchange on the 2nd, KODEX Secondary Battery Industry Leverage fell 23.2% last month, marking the lowest return among all ETFs. Other secondary battery-related ETFs also ranked low in returns, including TIGER Secondary Battery TOP10 Leverage (-22.44%), SOL Solid-State Battery & Silicon Anode (-20.59%), BNK Secondary Battery Cathode (-16.76%), RISE Secondary Battery Active (-16.39%), and ACE Secondary Battery & Eco-Friendly Vehicle Active (-16.22%). Conversely, RISE Secondary Battery TOP10 Inverse (synthetic), which bets on declines in secondary battery stocks, rose 13.52%, placing it among the top performers.
After posting positive returns in January and February, there were expectations for a recovery this year following a prolonged slump, but a sharp decline in March dashed those hopes.
The significant drop in secondary battery ETFs in March is attributed to the impact of the resumption of short selling. Secondary battery stocks, which had high loan balance ratios even before the resumption and were identified as likely short selling targets, took a direct hit as expected on the day short selling resumed, the 31st of last month. LG Energy Solution fell 6.04%, while POSCO Holdings (-4.62%), EcoPro (-12.59%), EcoPro BM (-7.05%), L&F (-7.57%), and POSCO Future M (-6.38%) also showed steep declines. Kim Min-gyu, a researcher at KB Securities, explained, "With the resumption of short selling on the 31st of last month, sectors with significantly increased loan balances or those where short selling was already active, such as batteries and chemicals, experienced sharp drops."
Uncertainty surrounding secondary battery stocks is expected to continue this month. Lee Anna, a researcher at Yuanta Securities, stated, "The secondary battery sector still has high valuations and lacks momentum, making it less attractive for investment," adding, "Following the resumption of short selling on the 31st of last month, sector uncertainty is expected to remain high through April."
It appears unwise to hastily buy stocks just because prices have adjusted. Korea Investment & Securities rated investment in battery cell companies as 'neutral,' citing low expected returns relative to high risks. Choi Moon-seon, a researcher at Korea Investment & Securities, analyzed, "Uncertainty in the automobile, electric vehicle, and battery markets is increasing. The growth rate of electric vehicles has slowed compared to expectations just one to two years ago, and hybrid vehicles have become more popular than expensive electric vehicles. Additionally, perceptions of LFP (lithium iron phosphate) batteries, once dismissed as low-performance, have changed, and the variable of Trump has also come into play." He added, "As expectations for growth decline, valuation multiples for battery companies have decreased, but due to increased uncertainty, further derating (decline in price-to-earnings ratios) is expected. This is not the time to buy just because stock prices have adjusted."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
