Retail Investors Sold 3 Trillion This Month... Bought Secondary Battery Stocks

Buying ETFs of Chinese Electric Vehicle and Battery Companies
Turning Attention to Future Growth Amid Samcheonpi Collapse

[Asia Economy Reporter Park Jihwan] Despite individual investors unloading nearly 3 trillion won worth of stocks in the domestic market this month, they have been heavily concentrating their buying power on the secondary battery sector. Individuals have also engaged in bargain hunting for stocks like POSCO and Hotel Shilla, which have experienced significant recent price corrections despite decent business conditions.

According to the Korea Exchange on the 17th, individual investors have net sold a total of 2.9638 trillion won worth of stocks on the KOSPI and KOSDAQ markets up to the previous day this month. This contrasts with foreign and institutional investors, who net bought 2.1902 trillion won and 897.3 billion won respectively during the same period.

Looking at the stocks that individual investors have focused on buying this month, secondary battery-related stocks dominate. The most purchased stock in the domestic market during this period was the ‘TIGER China Electric Vehicle SOLACTIVE ETF,’ which invests in Chinese electric vehicle and battery companies, with net purchases of 565.8 billion won. This ETF consists of the top 20 Chinese companies by market capitalization listed in China and the U.S. that are engaged in electric vehicle manufacturing and sales.

Individuals also net bought SK IE Technology and LG Chem, electric vehicle battery material companies, ranking 2nd and 5th in net purchases with 253.2 billion won and 159.3 billion won respectively. As the domestic market showed sluggish performance, including the breakdown of the 3,000-point level on the KOSPI, investors seem to be turning their attention to the secondary battery sector, which guarantees future growth potential and solid demand. Baek Young-chan, a researcher at KB Securities, said, "Global electric vehicle (EV) battery demand is expected to increase by 69.2% to 537 GWh next year compared to this year," adding, "The rapid growth of electric vehicles and EV batteries will lead to increased demand for secondary batteries, improving the earnings of related companies."

Despite decent business conditions, individual investors also heavily net bought POSCO (186.3 billion won) and Hotel Shilla (173.4 billion won), which have recently experienced significant price corrections. POSCO recorded sales of 20.64 trillion won and operating profit of 3.12 trillion won in the third quarter, representing increases of 44.7% and 365.7% respectively compared to the same period last year. Despite excellent performance, the stock price as of the previous day was 283,500 won, down 31.4% from the May peak of 413,500 won. This decline was influenced by the weakening of Chinese steel prices, which had sharply risen from the second half of last year through the first half of this year but turned bearish after mid-May, dragging POSCO’s stock price down as well. Park Hyun-wook, a researcher at Hyundai Motor Securities, said, "With the reduction of excess capacity in China reducing the influence of low prices and the recovery of pricing power in the steel industry, global steel prices and earnings are expected to stabilize at relatively high levels next year," adding, "The currently low valuation attractiveness is highlighted, so the stock price is also expected to rise."

Hotel Shilla’s third-quarter operating profit fell short of market expectations of 48 billion won by about half, causing its stock price to drop 7.1% just this month. However, securities firms analyze that the duty-free sector will gradually improve with the global phased transition to post-COVID normalcy (With Corona), sustaining an upward stock price trend. Park Jong-ryeol, a researcher at Hyundai Motor Securities, said, "Next year, with improved duty-free store performance and a return to profitability in the hotel division, favorable earnings momentum will continue," adding, "Stock price revaluation through earnings recovery is also expected to persist."

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