Foreigners Sold 470 Billion Won in Plunging Market, Bought LG Chem and Samsung SDI

Among the Top 10 KOSPI Market Cap Sectors, Only Secondary Battery Stocks Show Net Buying

[Asia Economy Reporter Minwoo Lee] On the previous day’s sharp market plunge, foreign investors mostly sold off the top 10 KOSPI stocks by market capitalization, ranging from semiconductors and bio to untact (non-face-to-face) sectors. In contrast, they bought shares related to secondary batteries. This appears to be due to the expected policy benefits as secondary batteries are included in the key projects of the Korean New Deal policy, as well as hopes for the future activation of the electric vehicle market.

According to the Korea Exchange on the 16th, foreign investors net sold 474.1 billion KRW in the securities market on the previous day. This is the first time since the 22nd of last month, when they net sold 474.9 billion KRW, that foreign investors have net sold more than 400 billion KRW. On the same day, institutions also net sold 761.6 billion KRW, and the KOSPI index closed at 2030.82, down 4.76% from the previous session. The market sentiment, which had recently risen past the 2200 level, reversed sharply.

However, among these, foreign investors focused on secondary battery stocks. Among the top 10 KOSPI stocks by market capitalization, they only bought Samsung SDI and LG Chem. They net purchased 26.2 billion KRW and 4.2 billion KRW respectively. In contrast, semiconductor stocks supporting the domestic market capitalization such as Samsung Electronics (79.7 billion KRW) and SK Hynix (22.4 billion KRW), as well as bio stocks (Samsung Biologics, 37.8 billion KRW) and untact representative stocks like NAVER (30.4 billion KRW) and Kakao (9.6 billion KRW), which were considered future market-leading sectors, were all net sold.

The industry views this as a case proving the future growth potential of the secondary battery sector. Not only is there an improvement in profitability, but policy benefits have also been confirmed as secondary batteries are included in the key projects of the government’s 'Korean New Deal' policy.

In fact, until the first quarter of this year, both Samsung SDI and LG Chem continued to post operating losses on electric vehicle (EV) batteries, but a turnaround to profitability is expected from the second quarter. In particular, LG Chem’s Poland plant yield is estimated to have improved from the 70% range in the first quarter to the 80% range in the second quarter. Typically, the average battery cell price is around 100 dollars per kilowatt-hour (KWh), but it is said that the production costs of major companies already fall below this level. Additionally, visible changes are occurring such as ▲ a 15% reduction in unit investment cost due to increased production speed ▲ labor cost reduction through expanded automation lines ▲ manufacturing cost reduction through yield improvement ▲ increased production efficiency by shifting from multi-product small-volume production to few-product large-volume production structure.

Researcher Minwoo Joo of Meritz Securities said, "LG Chem’s operating profit margin for Tesla EVs is estimated to have already reached 8-10%," and added, "Samsung SDI is expected to maintain a stable high single-digit margin from 2022, when it begins full-scale mass production of Gen5 prismatic batteries (target margin 10%)."

This content was produced with the assistance of AI translation services.