As China decided to halt the export of rare earth elements, which are essential raw materials for the world’s advanced industries, the stock prices of related thematic stocks surged.
Novatech stocks traded at 23,600 won on the Korea Securities Dealers Automated Quotations (KOSDAQ) market at 9:21 a.m. on the 14th. The stock price rose by 21.96% (4,250 won) compared to the previous trading day. Novatech is engaged in business utilizing neodymium magnets, which are one of the rare earth metal-based magnets, and is categorized as a rare earth thematic stock.
At the same time, stocks identified as rare earth-related thematic stocks, including Dongkuk R&S, Union, and Cenotec, all jumped by over 10%.
According to The New York Times (NYT), Chinese authorities ordered on the 4th to restrict the export of six types of refined rare earth elements and rare earth magnets. Rare earth shipments will be halted until the Chinese government establishes a new regulatory system, and export can only occur with special permits.
China's recent export ban on rare earth elements is interpreted as a retaliatory measure against the U.S. tariffs on China. However, the Korean industrial sector, which is highly dependent on Chinese rare earth elements, may also face greater burdens. Last year, the proportion of Korea's rare earth imports from China reached 50.8%.