In September, when the Korean stock market turned bullish, secondary battery-related stocks emerged as a battleground between individual investors and short sellers. While individuals went on net buying, the share of short-selling transactions also surged.
According to the Korea Exchange on the 15th, individuals made a net purchase of 101 billion won worth of POSCO FUTURE M shares through 12th this month. During the same period, the ratio of short-selling transaction value to the total transaction value was 25.53%, the highest among all stocks. As of last month, POSCO FUTURE M's short-selling transaction share was 9.17%.
L&F also saw individuals show a buying edge of more than 59 billion won so far this month. In the meantime, the short-selling transaction share reached 15.05%. Compared with last month, when the short-selling transaction value accounted for 5.33% of total transaction value, it nearly tripled.
LG Energy Solution and Samsung SDI are in a similar situation. This month, individuals made net purchases of 186 billion won and 49 billion won, respectively, in Samsung SDI and LG Energy Solution shares. Among all stocks, these were the second- and third-largest net purchase amounts, respectively. During the same period, the short-selling transaction share stood at 6.85% for Samsung SDI and 12.06% for LG Energy Solution.
As for the reasons behind the rising short-selling transaction share centered on secondary battery-related stocks, "hedge (risk avoidance)" demand is cited first. With the share of Korean semiconductor stocks having jumped in a short period, investors moved to short secondary battery stocks for hedging.
Foreign investors went on a "buy" spree over the past week (Sept. 8–12), purchasing 4.02 trillion won in the KOSPI market and 191 billion won in the KOSDAQ market, respectively. It was the largest weekly net buying on a transaction basis in more than 10 years. Foreign investors scooped up 1.825 trillion won of SK hynix and 1.65 trillion won (including preferred shares) of Samsung Electronics.
There is also a continued divergence of views on the secondary battery industry. The U.S. electric vehicle tax credit program is set to be abolished this month. Considering that the average transaction price of new U.S. electric vehicles is about $57,000, if the $7,500 tax credit disappears, the price will rise by about 15% for consumers. This means demand could slow in a core market for Korea's secondary battery industry.
On the other hand, buoyed by the artificial intelligence (AI) boom, the outlook is that demand for large-scale energy storage systems (ESS) will increase further. Domestic corporations also plan to use mid- to low-priced lithium iron phosphate (LFP) batteries to compete in earnest with Chinese products.
Based on current share prices, both individuals and short sellers are evenly matched. The average short-selling transaction price for POSCO FUTURE M is 133,000 won, which is not far from the share price as of 9:55 a.m. that day (132,500 won). At the same time, looking at LG Energy Solution's average short-selling transaction price (330,000 won) against its share price of 354,000 won, short sellers are booking about a 7% mark-to-market loss.
Jeong Jin-su, a Heungkuk Securities researcher, said, "Recently, while earnings forecasts for secondary battery stocks have stabilized lower, share prices have risen on expectations," adding, "Given the downside risks depending on U.S.-centered policy changes, it is time to make investment decisions based on realistic demand and earnings estimates."