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Kosdaq stocks are at an all-time high since 2004 by strong fund inflows from foreign investors who are rebuilding their investment portfolio with EV battery stocks abundant in the tech-heavy secondary market.
On Thursday, the Kosdaq index ended up 0.89 percent higher at 1,054.31, the highest level since 2004.
The recent upsurge in Kosdaq shares is attributed to intensive buying by foreign investors.
According to Korea Exchange, foreigners net purchased 303.9 billion won worth of Kosdaq shares on the first 15 trading days in July and institutional investors 9.11 billion won, lifting the index by 2.36 percent.
Foreigners, meanwhile, dumped 2.3 trillion won worth of Kospi shares, leading to a 0.32 percent fall over the same period. While chip stocks represent 25 percent in Kospi, foreigners have raised concerns over a peak out in semiconductor sector growth from the fourth quarter of this year. Foreigners offloaded 811.1 billion won in Samsung Electronics shares and 274.7 billion won in SK hynix in July.
Foreigners instead are refilling their portfolio with EV battery stocks, with Samsung SDI emerging as top on their buying list this month, followed by SK IET, and LG Chem.
Analysts noted that foreigners are eyeing on not only battery manufacturers but also component and materials producers on the secondary market.
Foreigners’ top favorite stock on the Kosdaq market was L&F Co., a battery cathode materials manufacturer and supplier to LG Chem, Samsung SDI, and SK Innovation. The next top buy stock was Kakao Games, EcoPro BM, and Chunbo. EcoPro BM also makes battery cathode materials and its major clients are Samsung SDI and SK Innovation. Chunbo is a battery electrolyte manufacturer and its customers are major battery makers.
Analysts noted that the companies have bright earnings-growth prospects in line with demand growth in the Korean battery sector.
Carmakers have placed large-scale battery orders this year to produce new electric vehicles, said Chung Won-seok, a researcher at Hi Investment. “Electric vehicle sales this year are on good path and materials producers are also expanding production facilities amid growing demand,” he said.
When Kosdaq companies that have major customers carry out facility investment, their stock prices surge on robust earnings.
In May, EcoPro BM, for example, announced a 134 billion won facility investment plan to expand supply of high nickel cathodes. Chunbo also said it will add production facility for mid- to large-sized LiFSI, a material for lithium-ion battery charging and discharging.
Lee An-na, an analyst at eBest Investment & Securities, said that growth prospect is bright for EcoPro BM that has been aggressive expanding at home and abroad. Its profitability is also projected to increase significantly on unique technology expertise and cost reduction through vertical integration.
Chung Won-seok, a Hi Investment analyst, said that shares of battery materials producers will be on positive flow for some time. The outlook for the overall battery industry is rosy on the back of robust demand in the electric vehicle industry led by China.
According to Samsung Securities, shipments of electric vehicles in China jumped 157.4 percent on year to 212,100 units in May. The figure is higher than that in Europe with 184,300 units, signaling a shift in demand in the electric vehicle market from Europe to China.
Shares of world’s top battery manufacturer Contemporary Amperex Technology (CATL) surged 57 percent this year. Korean battery shares, on the other hand, are undervalued, experts say, attracting more foreign investors to the market.
Shares of LG Chem, the rival to CATL, fell 0.73 percent this year. Its price-to-earnings ratio (PER), which measures a company’s current share price relative to its per-share earnings, stands at 35, significantly lower than 185 of CATL. A lower PER means there is more room for stock price growth. Samsung SDI’s PER stands at 73.
By Kim Gyu-sik, Shin Yoo-kyung, and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]