Foreign investors buy in Korean chip, battery stocks amid US-China tensions

[Provided by Maekyung Media Group]

Foreign investors bought over $3 billion worth of chip and battery stocks in South Korea over the last month, timed with the exit of foreign capital from assets of Chinese influence after the extension of a single-man rule in Beijing.

Data from stock market operator Korea Exchange shows that foreigners net bought 4.5 trillion won ($3.1 billion) worth of stocks in Kospi from Oct. 4 to Nov. 4. Foreigners were net sellers in just two sessions over the one-month period.

Thanks to aggressive buying by foreigners, Kospi rebounded 9 percent in a month. The country’s benchmark stock index had stayed sluggish throughout the year, losing 21 percent until early October.

Foreign investors cherry-picked on battery and chip stocks in Korea over the period.

Analysts see foreigner investors are taking out their capital from Taiwanese chip giant TSMC and other chip stocks based in China and Taiwan amid intensifying Chinese tensions with Taiwan and also the United States.

The Korean battery stocks are expected to be unaffected by Nov. 8 midterm elections or changes to the new tax credit to green power. Under the Inflation Reduction Act (IRA), the U.S. government is giving tax credits to consumers on electric vehicle purchase. Korea is one of world’s major suppliers of EV battery cells.

Foreign investors bought 932.7 billion won worth of shares in Samsung SDI and 686.1 billion won in LG Energy Solution, pushing up the price of the two Korean battery stocks by 32 percent and 33 percent, respectively, in a month. They also bought 152.2 billion won worth in POSCO Chemical, a battery materials maker.

Korean battery makers ? LG Energy Solution, Samsung SDI, and SK on ? can supply battery cells to electric car makers not just in the U.S. but in other parts of the world, noted Jung Won-seok, an analyst at Hi Investment & Securities.

Foreign investors bought in 152.2 billion won worth of shares in POSCO Chemical over the recent four weeks. The company produces both cathode and anode materials ? the core materials for making EV battery cells. It also is the main cathode materials supplier for Ultium Cells, the battery joint venture between American auto giant General Motors and LG Energy Solution, Korea’s largest and world’s second largest EV battery producer.

The IRA bill provides tax credit on purchase of EVs that use non-Chinese batteries and materials.

By Park Yoon-ye and Cho Jeehyun