Tesla Shock Sends Secondary Battery Stocks and ETFs Sliding Down One After Another

Tesla Stock Drops Over 30%, Secondary Battery Stocks Fall Over 20%
Seohak Gaemi Buys 220 Billion Won Worth of Tesla Shares in December

[Image source=Yonhap News]

[Asia Economy Reporters Kwon Jae-hee and Lee Min-ji] The stock price of U.S. electric vehicle maker Tesla has dropped by as much as 30% in a month, causing not only domestic secondary battery-related stocks but also secondary battery exchange-traded funds (ETFs) to decline consecutively. The securities industry forecasts that due to concerns over weakening electric vehicle demand, investment sentiment has frozen, and volatility in secondary battery-related stocks and ETFs is expected to remain high for the time being.

According to the Korea Exchange on the 30th, LG Energy Solution, the leading secondary battery stock, closed at 435,500 KRW, down 0.23% from the previous trading day. This marks about a 30% drop from 629,000 KRW on November 11. Over the course of a month (November 30 to December 29), it fell by more than 25.81%. Other secondary battery-related stocks also experienced significant declines. Samsung SDI fell 19%, L&F dropped 21%, LG Chem decreased 19%, SK Innovation declined 14%, and POSCO Chemical fell 18%, among others.

Due to the poor performance of secondary battery-related stocks, secondary battery ETFs have also recorded negative returns. Over the recent month (November 25 to December 26), secondary battery-themed ETFs averaged a -15% fluctuation rate. During this period, 'SOL Korea-style Global Electric Vehicle & Secondary Battery Active' fell 19.71%. 'KBSTAR Secondary Battery Active' and 'KODEX Secondary Battery Industry' dropped 14.07% each, and 'TIGER Secondary Battery Theme' also declined by 13.32%.

The consecutive decline in secondary battery-related stocks and ETFs is attributed to Tesla's sharp stock price drop. On the 29th (local time), Tesla closed at $121.82, up 8.08%, marking two consecutive days of gains. However, over the month, it has fallen by more than 30%. On the 27th (local time), Tesla plunged 11.41% in a single day. Since the beginning of the year, Tesla's stock price has plummeted about 70%, showing the largest drop among large-cap stocks on the New York Stock Exchange. Tesla's market capitalization has decreased by $720 billion (approximately 917 trillion KRW).

Tesla's stock price decline is attributed to the Federal Reserve's aggressive interest rate hikes reducing the appeal of growth stocks, concerns over demand weakness due to economic recession, and negative evaluations of Elon Musk's reckless Twitter acquisition.

The securities industry warns that volatility in secondary battery-related stocks may remain high for the time being and advises caution in investment, while also suggesting that excessive concerns should be avoided. Jeon Woo-je, a researcher at KB Securities, analyzed, "The risk factor is that concerns over weak electric vehicle demand due to economic slowdown could affect secondary battery demand, but growth is expected to continue in the mid to long term." Ianna, a researcher at Yuanta Securities, said, "Electric vehicle demand centered on Europe and China is likely to slow next year, but battery supply and demand in the U.S. remains tight," adding, "Due to lowered valuations and order momentum in the U.S., secondary battery-related stocks are expected to rebound from February next year."

Although Tesla has been labeled the "worst stock of the year" due to demand weakness and owner risk, the blind love of overseas investors (Seohak Gaemi) for Tesla remains strong.

According to the Korea Securities Depository's SEIBRO, from November 28 to 29, the stock most purchased by domestic overseas stock investors was Tesla, with a scale of 220 billion KRW. The next most purchased stock was the 'ProShares UltraPro QQQ ETF,' which can earn three times the gains of the Nasdaq 100 index, at 112 billion KRW, only half the net purchase scale of Tesla. The increase in investors buying at low prices or lowering their average purchase price is due to Tesla's stock price falling more than 37% over the month.

Whether Seohak Gaemi's low-price buying strategy will work is uncertain. Elon Musk's ongoing political issues and growing concerns over demand slowdown due to economic recession are expected to cause high short-term volatility. However, considering Tesla's position in the global electric vehicle market and the growth potential of new businesses such as autonomous driving and robot production, some analyses suggest a mid-to-long-term approach is worthwhile. Im Eun-young, a researcher at Samsung Securities, said, "Consumer fandom is rapidly fading, so Elon Musk's focus on Tesla is more important than anything else," adding, "Advancements in related technologies such as autonomous driving, robotics, and low-earth orbit communications will lead to an increase in Tesla's corporate value."

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