LG Energy Solution Included in KOSPI 200... Increased Volatility Concerns Due to Potential Short Selling

Intraday 4.31% Drop in Jisu Transfer Index
Stock Price Falls Below 400,000 Won for the First Time

[Asia Economy Reporter Kwon Jae-hee] With LG Energy Solution's inclusion in major indices taking place today (the 11th), attention is focusing on the future direction of its stock price. In particular, concerns are growing as short selling becomes possible from today, which could increase volatility.

On the 11th, LG Energy Solution will be specially included due to the stock changes in the KOSPI 200 and KRX K-New Deal indices. The day before, LG Energy Solution closed at 417,500 KRW, up 1.71% from the previous trading day, and based on this price, the special inclusion due to stock changes in the KOSPI 200 and KRX K-New Deal indices will proceed today. The size of exchange-traded funds (ETFs) and index funds tracking the KOSPI 200 is estimated to be about 22 trillion KRW. Accordingly, a large inflow of funds occurred during the rebalancing process of passive funds tracking these indices the day before.

Heo Yul, a researcher at NH Investment & Securities, analyzed, "LG Energy Solution will absorb 360 billion KRW of passive funds due to inclusion in the KOSPI 200 and about 140 billion KRW due to inclusion in the 'KRX K-New Deal.' This means that about 500 billion KRW of passive funds flowed in on the 10th, the day before inclusion."

However, the fact that short selling becomes possible from today due to inclusion in the KOSPI 200 is a factor that raises market concerns.

According to the Korea Exchange as of 9:10 AM on the 11th, LG Energy Solution is trading at 399,500 KRW, down 4.31% from the previous trading day. This is the lowest price since its listing.

The geopolitical crisis causing a sharp rise in prices of key battery materials such as nickel, increasing cost burdens, is also cited as a factor pulling down the stock price.

Accordingly, SK Securities has downgraded LG Energy Solution to a 'neutral' investment rating. Yoon Hyuk-jin, a researcher at SK Securities, analyzed, "As secondary battery material prices rise, LG Energy Solution's profitability is deteriorating," and added, "Since this year is expected to see cost burdens due to rising material prices rather than growth, the investment rating is downgraded to neutral."

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