Korean battery stocks biggest winners among growth stocks

LG Energy Solution Ltd. and Samsung SDI Co.‘s logos [Courtesy of each company]

Growth stocks in South Korea are mixed, with shares of secondary battery companies gaining sharply while those of internet-related companies losing this year.

According to the Korea Exchange on Thursday, the KRX BBIG K-New Deal Index, composed of 12 stocks from the battery, bio-science, internet, and gaming (BBIG) industries, stood at 2,013.13 on Wednesday, up 10.38 percent from 1,823.85 at the end of last year.

The KRX BBIG K-New Deal Index consists of stocks of LG Energy Solution Ltd. (LGES), Samsung SDI Co., POSCO Future M Co. Samsung Biologics Co., Celltrion Inc., SK bioscience Co., Naver Corp., Kakao Corp., Douzone Bizon Co., Krafton Inc., NCSoft Corp., and Netmarble Corp.

The combined market capitalization of the index components grew by about 68 trillion won ($51.14 billion) to 388.45 trillion won from 320.56 trillion won at the end of last year.

The increase is not seen as significant given that the primary Kospi gained 15.14 percent over the same period. It is, however, a successful recovery after the index saw a 41.99 percent drop last year.

The index, composed of growth stocks, was hit hard last year following a series of tightened monetary policies by central banks across the world. A glimpse of recovery, however, appears as expectations grow over a termination of interest rate hikes.

The index recovery has been largely attributed to strong performance of large-cap secondary battery stocks, with LGES up 33.64 percent, Samsung SDI 28.26 percent, and POSCO Future M Co. 130 percent.

Performance by industry, however, was mixed.

Naver Corp. and Kakao Corp. logos [Courtesy of each company]

The KRX Secondary Battery K-New Deal Index, composed of 10 Kospi and Kosdaq companies, surged 53.52 percent to 7,170.45 on Wednesday from 4,670.60 at the end of last year.

The KRX Game K-New Deal Index and the KRX Bio K-New Deal Index, on the other hand, showed only modest gains of 4.26 percent and 3.48 percent, respectively.

The KRX Internet K-New Deal Index lost 3.85 percent to 1,004.08 after dropping to 981.78 during the day on April 10.

Shares of Naver and Kakao rose 7.83 percent and 10.36 percent, respectively, but those of other internet-related companies saw declines.

Shares of Douzone Bizon fell 5.29 percent, KMW Co. 21.13 percent, Connectwave Co. 7.79 percent, and Ahnlab Inc. 5.10 percent.

Internet stocks are likely to improve when the economy recovers, experts said, although imminent rebound is unlikely.

“Better earnings at internet companies are expected only if the economy is robust, as revenue from digital advertisements is closely affected by the economy,” said Oh Dong-hwan, an analyst at Samsung Securities Co. “For now, there is more weight on the possibility of a soft landing than a quick boost in the market.”

Oh noted that many indicators suggest the economy will recover in the second quarter of this year but there are many uncertainties remaining.

“Any recovery in the internet industry is likely to come maybe in the latter half of the year,” the analyst said.