Foreigners and Individuals 'Favor' Secondary Battery ETFs

Foreign Investors' Massive Net Buying of Domestic Listed 2nd Battery ETFs This Month

[Asia Economy Reporter Minji Lee] Amid concerns over the semiconductor industry's downturn leading to continued outflows by foreign and institutional investors in the stock market, all three groups?foreigners, institutions, and individuals?are showing net buying trends in secondary battery-related exchange-traded funds (ETFs).

According to the Korea Exchange on the 17th, foreign investors have been purchasing large amounts of domestically listed secondary battery-related ETFs since the beginning of this month (August 1?13). The top net purchase items were KODEX 2nd Battery Industry (28.8 billion KRW), KODEX 200 (22.7 billion KRW), and TIGER 2nd Battery Theme (14.7 billion KRW). These ETFs invest in secondary battery stocks of domestic listed companies such as LG Chem, Samsung SDI, POSCO Chemical, SK Innovation, EcoPro, SK IE Technology, and EcoPro BM. Institutional investors also bought 36.5 billion KRW worth of TIGER KRX 2nd Battery K-New Deal stocks.

Individual investors also purchased large amounts of secondary battery-related stocks in the ETF market. The top net purchases were KODEX Leverage (222.5 billion KRW), TIGER Global Lithium & 2nd Battery (150 billion KRW), TIGER China Electric Vehicle (143 billion KRW), KODEX 200 (38.9 billion KRW), and TIGER Global Autonomous Driving & Electric Vehicle (29.3 billion KRW). Individuals bet on the KOSPI rise while heavily buying secondary battery-related ETFs listed in overseas markets. TIGER Global Lithium & 2nd Battery diversifies investments in lithium upstream and downstream companies and secondary battery companies, with country weightings of China (50%) and the U.S. (20%). TIGER Global Autonomous Driving & Electric Vehicle invests in companies listed on U.S., Chinese, and domestic exchanges that hold electric vehicle, electric vehicle parts, and autonomous driving technologies.

Funds have flowed into secondary battery-related companies as the government pushes for a transition to electric vehicles through eco-friendly policies and major companies continue large-scale investments. Recently, U.S. President Biden issued an executive order to expand eco-friendly vehicles, aiming to make half of new cars in the U.S. eco-friendly by 2030, which has driven up electric vehicle-related stocks. Eunyoung Lim, a researcher at Samsung Securities, said, "The share of electric vehicle sales in the U.S. in the first half of this year was only 3.4% (680,000 units), but considering the U.S. market is expected to grow to 7 million units within 10 years, domestic battery manufacturers producing key core components are likely to expand battery production."

Due to uncertainties in semiconductor companies' earnings, concerns over delayed economic recovery, and a strong exchange rate caused by the ongoing Delta variant wave, investment sentiment and supply-demand conditions have weakened, so index gains are expected to be limited for the time being. Jaehwan Heo, a researcher at Eugene Investment & Securities, said, "Foreigners' selling pressure has increased due to concerns over the memory semiconductor industry, and the exchange rate is at around 1,170 KRW, the highest since September last year. Under the current circumstances, it is difficult to increase stock exposure further, so it is necessary to respond mainly with sectors that showed strength during the COVID-19 pandemic, such as secondary batteries, software, and pharmaceuticals/biotech."

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