LG Ensol's Locked-in Shares Released... "MSCI Positive Factor, Should Seize Opportunity to Increase Weight"

Korea Investment & Securities Report

[Asia Economy Reporter Myunghwan Lee] As LG Energy Solution faces the unlocking of more than 100 million shares under lock-up on the 27th, securities analysts have suggested that this should be seen as an opportunity to increase holdings. This is because positive factors are expected ahead of the Morgan Stanley Capital International (MSCI) August quarterly review.

On the 23rd, Korea Investment & Securities analyzed, "A 'wag the dog' phenomenon may occur next week due to LG Energy Solution's supply and demand issues." The term 'wag the dog' means the tail wagging the body, and in financial markets, it refers to futures price fluctuations influencing spot prices. Typically, spot prices determine futures prices.

The supply and demand issue highlighted by Korea Investment & Securities is the scheduled unlocking of locked shares on the 27th. After six months since listing, 201.46 million shares held by institutional investors will be unlocked. This accounts for about 86% of the listed shares. Even excluding the 191.5 million shares held by the largest shareholder, LG Chem, there is a high possibility that 9.96 million shares held by institutional investors will be released.

Korea Investment & Securities pointed out that this lock-up expiration could increase supply and demand concerns unrelated to the company's fundamentals. Separately, on the 25th, individual stock futures of LG Energy Solution are scheduled to be listed. Given LG Energy Solution's liquidity ratio is around 15%, it explained that individual stock futures selling might increase rather than short selling through securities lending.

However, Korea Investment & Securities analyzed that the possibility of expanding LG Energy Solution's liquidity ratio in MSCI's August quarterly review is positive. Currently at 9%, if the liquidity ratio rises to 15% due to the lock-up expiration, passive funds could theoretically flow in about 250 billion KRW.

Researcher Dongchan Yeom of Korea Investment & Securities advised, "If stock price volatility increases due to next week's supply and demand instability, it should be taken as an opportunity to increase holdings ahead of the August MSCI quarterly review."

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