July ETF Returns: Secondary Battery Stocks Shine

Most of the Top 10 Performers Are Secondary Battery Stocks
"Rebound in Lithium Prices and U.S. Regulations on China Serve as Positive Catalysts"

In July, most of the top-performing Exchange Traded Funds (ETFs) were related to secondary battery stocks. This trend is interpreted as reflecting expectations of secondary benefits due to a rebound in lithium prices as well as U.S. trade regulations targeting China.

According to the Korea Exchange on the 25th, from July 1 to the previous day, the ETF with the highest rate of return was KODEX Secondary Battery Industry Leverage at 38.59%. This was followed by TIGER Secondary Battery TOP10 Leverage at 35.44%, PLUS Global Rare Earth & Strategic Resource Producers at 33.72%, and TIGER 200 Energy Chemical Leverage at 23.24%. Among the top 10 ETFs by rate of return, seven were related to secondary batteries.

The recent rise in secondary battery ETFs is attributed to the recovery in raw material prices and U.S. trade regulations against China. The U.S. also made a preliminary decision to impose a 93.5% anti-dumping tariff on Chinese graphite, which acted as a positive factor. If the anti-dumping tariff is added, the effective tariff imposed on Chinese graphite in the U.S. market will rise to 160%.

Jang Jeonghun, a researcher at Samsung Securities, said, "The final decision on tariffs for Chinese graphite anode materials is scheduled to be made by December 5," and added, "Changes are expected in the supply chain landscape for graphite anode materials among U.S. battery manufacturers in the future."

Additionally, the rebound in lithium prices, a core material for batteries, also acted as a positive factor. On June 23, the price of lithium had fallen to 57.5 yuan per kilogram, but by July 22, it had risen to 69.4 yuan. Analysts say that the price increase was due to the easing of oversupply, as Jiangte Mining in China halted lithium production at a mine in Qinghai Province following local government orders.

Han Byunghwa, a researcher at Eugene Investment & Securities, explained, "Considering that China dominates the global electric vehicle value chain, managing oversupply from China is a very important factor," and added, "The visibility of a recovery in the global electric vehicle market has increased."

However, there are also skeptical views regarding further gains. Kim Hyunsoo, a researcher at Hana Securities, said, "The rebound in lithium prices and the U.S. tariffs on Chinese products are certainly positive factors for material companies' earnings," but also analyzed, "However, the market has already priced in improvements that go beyond the actual earnings improvement factors." He added, "As the market has now surpassed the upper end of the band and become more sensitive to negative factors, it is a time when risk management is once again necessary."