As the stock prices of companies related to secondary batteries have been on a downward trend for several consecutive days, individual investors have started to engage in bargain hunting. However, caution is being expressed in the securities sector, stating that now is not the right time to buy. Analysts say that uncertainty remains due to the intertwining of the long-term effects of the U.S. tariff policy and the Inflation Reduction Act (IRA) with individual corporate issues, including capital increases.
According to the Korea Exchange, as of the 29th, the stock prices of major secondary battery stocks have been significantly volatile since the beginning of this month.
The stock price of LG Energy Solution fell by 10.93%, while other KOSPI-related stocks, such as LG Chem (-10.23%) and SK Innovation (-8.05%), also mostly performed poorly. Additionally, Ecopro (-19.8%) and ECOPRO BM (-12.51%), both listed on KOSDAQ, could not escape the plummet in stock prices. This contrasts with the rise of the KOSPI index (4.44%) and the KOSDAQ index (1.61%) during the same period.
This month, a number of major secondary battery stocks, including Samsung SDI, ECOPRO BM, Ecopro, LG Energy Solution, LG Chem, and SK Innovation, recorded 52-week lows. In particular, LG Energy Solution saw its offering price of 300,000 won collapse, resulting in a drop to 4th place in the KOSPI market capitalization rankings.
As the stock prices of secondary battery stocks decline, individual investors have taken to bargain hunting. This month, LG Energy Solution (32.82 billion won) ranked second in the list of stocks most frequently purchased by individuals. LG Chem (18.23 billion won) and Samsung SDI (11.32 billion won) ranked fifth and tenth, respectively. SK Innovation (900 won) and L&F (38.3 billion won) also made it to the top ranks of net purchases.
The decline in secondary battery stocks is seen as a result of the chasm in the electric vehicle industry (a temporary slowdown in demand) combined with concerns over the potential abolition of the IRA in the United States. Recently, the Advanced Manufacturing Production Credit (AMPC) included in the IRA managed to avoid the worst-case scenario of complete repeal, causing a temporary rebound in secondary battery stock prices, though they soon reversed back to a downward trend.
In addition to the poor business environment, analyses suggest that the competitiveness of domestic corporations is weakening. This is attributed to the technological prowess and price competitiveness of Chinese battery companies like CATL and BYD. Currently, the global battery market share of both CATL and BYD amounts to 55%.
Kim Hyun-su, an analyst at Hana Securities, noted, "The biggest reason for the battery bubble is overlooking the market logic that even environmentally friendly policies may have their speed adjustments," and added, "The current situation where China dominates the battery supply chain warns that the energy transition could risk transforming into a Chinese transition."
As significant operating losses persist, some secondary battery corporations have pursued capital increases. In March of this year, Samsung SDI executed a capital increase of 2 trillion won, marking its lowest price of the year. Similarly, POSCO FUTURE M announced a capital increase of 1.1 trillion won this month, immediately after which its stock price plummeted by over 7%. Following the drastic decline in stock prices, key executives at Samsung SDI purchased about 170 million won worth of their firm's shares, while the chairman of L&F bought approximately 100 million won worth this month.
Despite significant drops in stock prices, cautious opinions in the securities sector suggest that this is still not the bottom. Hanwha Investment & Securities stated in a report published on the 28th, "Investors who sold or short-sold secondary battery-related stocks this year have made revenue," asserting that "the subsidy cuts announced by the Trump administration, exchange rate fluctuations, earnings, and various events are still not favorable for the sector." Hanwha Investment & Securities proposed reducing the weighting of the secondary battery sector for another month.
Han Hwi-hwan, an analyst at KB Securities, stated, "If the penetration rate of secondary batteries increases due to lower-priced models or the launch of Tesla's robo-taxi, the worst may pass," and added, "Whether this truly is the bottom remains a concern, but at least it is time to resume studying secondary batteries."