October's 'Secondary Battery Nightmare'... Sharp Drop After Buying During Correction Period

Individual Investors Focused on Net Buying Secondary Battery Stocks Adjusted in August-September During October
Posco Future M's Evaluation Loss Rate Exceeds 20%
Individuals Buying Naver and Samsung Electronics Perform Better Than Market

All the stocks that individual investors heavily bought last month performed poorly. In particular, they were hit hard in the secondary battery sector, which had contributed to the growth of individual accounts in the first half of this year.

According to the financial investment industry on the 2nd, from the 4th to the 31st of last month, individual investors bought the most shares of LG Energy Solution among domestic listed companies. They purchased stocks worth 420 billion KRW over the month. The average purchase price was 436,462 KRW, which is 11.7% higher than the closing price of 385,500 KRW on the 31st of last month.

LG Energy Solution fell 19.1% during October. Since reaching its peak of 620,000 KRW on July 26, it has been on a downward trend. The company was affected by concerns over a slowdown in electric vehicle sales after major customers such as GM and Tesla announced their Q3 earnings this year. When LG Energy Solution’s stock price dropped more than 20% from its peak, individual investors saw it as a buying opportunity. In Q3 this year, LG Energy Solution recorded sales of 8.2 trillion KRW and an operating profit of 731.2 billion KRW, exceeding the market expectation of 675.1 billion KRW in operating profit. On the day the company announced better-than-expected results, its stock price rose more than 7%. After the stock price had fallen significantly over August and September, the surprise earnings report raised hopes of a rebound. This is why individuals bought LG Energy Solution shares.

Contrary to individual investors’ hopes, LG Energy Solution’s stock price is retreating again. The decline in Tesla’s stock price continues in the New York market, and foreign investors have been reducing their holdings day by day, pushing the stock price below 400,000 KRW. Jeong Yong-jin, a researcher at Shinhan Investment Corp., explained, "The slowdown in electric vehicle demand is expected to continue until the launch of mid- to low-priced models in the first half of next year," adding, "As the need for low-priced electric vehicle models grows, demand for low-cost Chinese batteries may increase."

EcoPro BM was also purchased net by individuals for 275.8 billion KRW, who judged that the recent drop from the peak was significant in a short period, but they were disappointed by the Q3 results. EcoPro BM recorded sales of 1.8 trillion KRW and an operating profit of 45.9 billion KRW in Q3. Market expectations were sales of 2 trillion KRW and operating profit of 109.6 billion KRW, showing a gap from the actual figures. Jang Jeong-hoon, a researcher at Samsung Securities, explained, "The poor performance of electric tools for Samsung SDI and the slowdown in European customer orders through SK On affected the results."

Individual investors’ love for the secondary battery sector extended to POSCO Holdings, Samsung SDI, POSCO Future M, and SK Innovation. POSCO Future M, which was purchased for 231 billion KRW, has seen its current stock price fall more than 20% below the average net purchase price by individuals. Due to weak electric vehicle demand in Europe and yield risks, the earnings outlook for the cathode material segment has been lowered. Along with the downward revision of earnings forecasts, the stock price fell 34% over the month. The Q3 operating profit was only 55% of market expectations.

Most secondary battery-related stocks reached new highs in July but showed a correction trend over August and September. Given the lingering earnings expectations and the excessive drop from the peak, these stocks had conditions favorable for individual investors. The problem was that it was not the bottom. As Tesla’s stock price continued to fall, investment sentiment toward electric vehicles and secondary batteries weakened.

Individual investors bought 302.8 billion KRW worth of Doosan Robotics, which was listed last month. Doosan Robotics, which attracted attention even before its listing, showed a disappointing performance after going public. On the 5th of last month, Doosan Robotics’ stock price briefly rose to 67,600 KRW. The stock price, which had risen 160% from the IPO price of 26,000 KRW, fell to 32,150 KRW on the 27th of last month. Although it succeeded in a brief surge on the first day of listing, most robot companies’ stock prices struggled due to the sluggish stock market. Individual investors concentrated their purchases on Doosan Robotics in the early days of listing and have recorded unrealized losses so far. The average net purchase price by individuals, 47,376 KRW, has not been seen since October 16.

Individual investors who bought stocks unrelated to the secondary battery sector, such as Naver and Samsung Electronics, performed relatively well compared to the market. Individuals net purchased 155.8 billion KRW worth of Naver shares in October. The average purchase price was 187,877 KRW, similar to the closing price of 187,400 KRW on the 31st of last month. They also bought 142.5 billion KRW worth of Samsung Electronics shares. Considering the KOSPI fell 7.6%, individuals who bought Naver and Samsung Electronics stocks have positive returns compared to the market.

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