[The Editors' Verdict]Stocks Dreaming, Economy Without Dreams

Secondary Battery Stocks Show Fearsome Growth
Concerns Rise Over Structural Low Growth in the Economy

The stock market literally went up and down. This is about the secondary battery stocks that surged relentlessly this year but suddenly plunged during trading yesterday (26th), shaking the domestic stock market. Leading secondary battery stocks such as POSCO and the EcoPro group, which had driven the market so far, also showed sharp rises earlier in the day but turned to a steep decline in the afternoon as profit-taking sales poured in. As a result, the market swung between heaven and hell amid record trading volumes. This has raised concerns that the tail (secondary battery stocks) might be shaking the body (the stock market).

From the perspective of market analysts, the prices of secondary battery stocks have already surpassed burdensome levels. The influx of individual investors was so strong that it repelled short-selling attacks from foreign and institutional investors, causing stock prices to surge rapidly. Securities firms have become reluctant to issue reports containing target prices and investment opinions, or have stopped issuing them altogether. Meanwhile, a large volume of sell orders emerged around the leading secondary battery stocks, making future price prospects uncertain.

However, this does not mean that rosy forecasts have disappeared. In the massive trend of the automobile market shifting toward electric vehicles, the growth potential of these stocks still stands out. Such attractive growth stories have spread, and individual investors have flocked almost blindly. POSCO and the EcoPro group have provided new growth stories through aggressive investments such as new and expanded domestic and overseas factories.

As the saying goes, "stocks live on dreams." Stock prices are fundamentally the result of a company's intrinsic value plus expectations (dreams). Expectations reflect future value. For example, on the day Samsung Electronics announced its worst performance, its stock price actually rose because of expectations that the company would improve going forward. Expectations influence stock prices through volatility. When expectations fade, prices fluctuate; when expectations grow, prices rise.

Alongside secondary battery stocks, it is difficult to find such "inflated dreams" these days in semiconductor stocks, which represent both the present and future of the Korean economy. Although they enjoyed an exceptional boom during the COVID-19 pandemic, Samsung Electronics and SK Hynix have both struggled due to weak demand afterward. While there is strong anticipation for an industry rebound due to the ChatGPT trend, production cuts, and signs of demand recovery, semiconductor stocks have not attracted explosive interest like secondary battery stocks.

Moreover, rumors have recently circulated about a shake-up in Samsung Electronics' management, blaming poor performance and neglect of technology development. While these can be dismissed as mere rumors or gossip, some points deserve consideration. Notably, in Samsung Electronics, which emphasizes "technological super-gap," the AI-related high-performance memory technology expected to drive performance improvement and stock price growth is reportedly not at a level to outpace competitors. Regardless of the truth of these rumors, worrying about Samsung Electronics is pointless. The company has always bounced back during difficult times.

The bigger problem is the Korean economy. While the global economy is stirring, the Korean economy is lagging behind. It looks like a stock without expectations, a stock that has lost its dream. On the 25th (local time), the International Monetary Fund (IMF) raised its global economic growth forecast for this year to 3.0%, but lowered South Korea's economic growth forecast from 1.5% to 1.4%. This marks the fifth consecutive downgrade since April last year.

The country's economic situation will improve if Samsung Electronics and others recover. However, without new visions and sweeping innovations, it seems difficult to escape the structural low-growth trend. Moreover, the general election is approaching. Amid this, there is growing concern that the economy might get caught up in the whirlpool of the election.

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