[Market Focus] Secondary Battery Stocks Decline on News of Early Repeal of U.S. IRA Tax Credits

On May 20, shares of secondary battery companies, including LG Energy Solution, are showing a broad decline in the domestic stock market following reports that the United States may end the Inflation Reduction Act (IRA) tax credits sooner than initially planned.

As of 9:50 a.m. on this day, LG Energy Solution shares are trading at 281,000 won per share, down 3.6% from the previous session. Posco Future M has also dropped by 4.61%. Samsung SDI is down 3.66%, and Lotte Energy Materials has declined by 1.90%. In the KOSDAQ market, both Ecopro BM and Ecopro are each recording declines of over 3%.

This movement is interpreted as a reaction to foreign media reports that Mike Johnson, the Speaker of the U.S. House of Representatives and leader of the House Republicans, has proposed the early repeal of IRA tax credits to party hardliners. Punchbowl News reported the previous day that the Republican leadership had reached a tentative agreement to eliminate all IRA tax credits by 2028. This is several years earlier than the originally set timeline for the repeal of 'some' IRA tax credits stipulated in the initial bill.

As a result, investor sentiment has deteriorated, particularly among domestic secondary battery stocks that had benefited from the IRA tax credits, leading to confirmed selling pressure. On the same day, solar-related stocks are also showing weakness. Hanwha Solutions is currently recording a decline of over 8%.

The bill could be brought to the House floor as early as this week after passing through the Rules Committee. However, it has been reported that Republican lawmakers representing districts that attracted investment through the IRA tax credits are opposing this early repeal. Given the current House composition of 220 Republicans and 213 Democrats, if just four members defect within the party, it will be impossible to pass the bill independently. Political media outlet Politico reported that even if the bill passes the House, it still faces the Senate, noting that Republican senators have not presented a unified stance on the early repeal of these tax credits.