EV Battery Stocks in Korea Add to This Year’s Sharp Gains

(Bloomberg) — Korean stocks tied to the electric-vehicles’ battery space extended this year’s frenzied rally on Monday, with market watchers citing a slew of positive developments in the sector.

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Last week’s better-than-estimated results from battery maker LG Energy Solution Ltd. and a report that some Chinese firms have cut back production of lithium — a key material — are seen as having sparked renewed interest in the sector which has been a hot favorite among Korean retail investors in recent months.

On Monday, shares of cathode-active materials supplier Ecopro BM Co. and its parent Ecopro Co. both surged more than 20% intraday. The latter’s stock is now up 600% in 2023 and the supplier to Ford Motor Co. and Samsung SDI Co. plans to expand its manufacturing presence in South Korea, Bloomberg News reported last week.

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Retail investors’ love for EV supply-chain plays has sparked a dizzying surge in some smallcap stocks and helped Korea’s Kosdaq index post a world-beating rally. Interest in local firms has grown as dominant Chinese peers face increased scrutiny from the US, and amid a lack of momentum in Korean semiconductor and automaker shares.

“There seems to be a systematic limitation for trading in the Korean markets as there aren’t many sectors other than EVs that are expected to post profit growth this year,” said Yoon Joonwon, a fund manager at DS Asset Management Co., adding however that “the rally seems excessive.”

In a sign of the wider search for all things lithium and battery related, shares of steel producer Posco Holdings Inc. jumped more than 10% at one point on Monday to their highest since May 2021, with analysts citing expectations for its lithium business to continue to boost its price.

Largecap names like LG Chem Ltd. and SK Innovation Co. each climbed more than 5%. Smaller stocks that some investors see linked to lithium, such as Kum Yang Co. and Enplus Co., also jumped.

Read: Short Sellers Losing Battle With Day Traders in Korea’s EV Rally

In other sector developments, Tesla Inc. marked down all of its vehicles again in the US after price tweaks throughout the first quarter yielded an incremental sales gain. Separately, the company said it will build a large new battery factory in Shanghai.

–With assistance from Hongcheol Kim.