[MarketING] Secondary Battery Stocks Leading the Bull Market... "Overheating Concerns"

KOSPI Recovers to 2490 Level After 8 Months
KOSDAQ Rises to 870 Level After 10 Months

The KOSPI rose for the second consecutive day, reclaiming the 2490 level. It is the first time since August last year that the KOSPI has closed above 2490. The KOSDAQ also climbed above the 870 level for the first time in 10 months. Attention is focused on whether the secondary battery stocks that pushed the KOSDAQ above 870 will also lead the KOSPI to break through the 2500 mark.

KOSPI Settles Above 2490... KOSDAQ Surpasses 870

On the 5th, the KOSPI closed at 2495.21, up 14.70 points (0.59%) from the previous day. The KOSDAQ ended the day at 872.36, rising 15.18 points (1.77%). Based on closing prices, the KOSPI surpassed the 2490 level for the first time since August 19 last year (2492.69), and the KOSDAQ exceeded 870 for the first time since June 9 last year (877.18).

[Image source=Yonhap News]

Buying pressure from foreigners and institutions drove the index gains. Institutions net purchased 301.5 billion KRW in the KOSPI market and 68 billion KRW in the KOSDAQ market. Foreigners net sold 17.4 billion KRW in the KOSPI market but bought 169.6 billion KRW in the KOSDAQ market. Individuals net sold 276.4 billion KRW in the KOSPI market and 204.8 billion KRW in the KOSDAQ market on the day.

Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, "The KOSDAQ showed strength with simultaneous net buying by foreigners and institutions," adding, "Along with improved supply and demand, secondary batteries and pharmaceutical/biotech sectors rose more than 1%."

The strength of secondary battery stocks led the KOSDAQ to break through the 870 level. On the day, the top three KOSDAQ market cap stocks?EcoPro BM, EcoPro, and L&F?rose 4.68%, 8.42%, and 4.27%, respectively. As these stocks continued their strong performance, the KOSDAQ has been hitting new yearly highs consecutively.

The strength of secondary battery stocks was also seen in the KOSPI, drawing attention to whether it can help the KOSPI break through the 2500 level. The KOSPI has not reached 2500 since August last year. On the day, Samsung SDI surged 7.16%, and LG Energy Solution rose 2.26%.

Concerns Over Overheating Amid Sustained Strength in Secondary Battery Stocks

As secondary battery stocks have continued their high-flying trend this year, concerns about overheating have emerged.

Samsung Securities downgraded its investment opinion on EcoPro from 'Buy' to 'Hold,' stating that the current stock price is in a significantly overvalued range. Jang Jeong-hoon, a researcher at Samsung Securities, analyzed, "It is a strange situation where the holding company is receiving a 20% premium over the value of its equity stake," adding, "Holding companies typically trade at a 30-50% discount to the value of their operating companies' equity stakes, which the market generally accepts. EcoPro has been evaluated at a discount of 30% to 70% after the spin-offs of EcoPro BM and EcoPro HN, but since March, it has been trading at a premium rather than a discount."

Earlier, Eugene Investment & Securities also downgraded its investment opinion on EcoPro BM from 'Buy' to 'Hold' due to overheating concerns. Han Byung-hwa, a researcher at Eugene Investment & Securities, explained the reason for the downgrade, saying, "The future outlook remains positive, but the stock price has reflected future earnings too quickly, so a period to verify this is needed."

The opinion is that valuation levels should be considered more than future growth. Researcher Han said, "What investors need to judge now is not the visibility of EcoPro BM's future growth but the high valuation applied," adding, "Domestic cathode material companies are already using each other's elevated values as benchmarks when assessing fair value. For example, the valuation of POSCO Future M, which has received large orders, is compared to EcoPro BM." He further noted, "Considering the status of domestic cathode material companies, there is some agreement with this valuation approach, but the view that only competition among domestic cathode material companies will remain in the U.S. and European markets is overly optimistic."

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