Foreign ownership of EcoPro shares hits four-year low

[Photo by MK DB]

Foreign ownership of South Korea’s EcoPro Co. has fallen below 5 percent, the lowest in nearly four years, as foreigners may be speculating that shares will.

EcoPro has developed a range of advanced cathode materials for electric vehicle batteries.

According to the Korea Exchange, foreign investors’ stake in EcoPro stood at 4.96 percent as of May 4. This is the first time since March 7, 2019 that foreign ownership of the stock has fallen below 5 percent. From 7.18 percent at the start of the year, the foreign ownership continued to rise, reaching 14.44 percent in mid-February, but has since fallen to around 5 percent this month.

While foreign ownership of EcoPro is declining, the company’s stock price had been soaring until recently, with concerns about overheating being raised repeatedly last month. On April 8, EcoPro’s closing price was 638,000 won ($482.3), down 22.20 percent from 820,000 won, the highest closing price in 52 weeks and the highest in the company’s history on April 11.

Amid warnings of a surge in shares, Hana Securities downgraded its recommendation of EcoPro to sell from buy on April 12. At that time, analyst Kim Hyun-soo pointed out that EcoPro’s current market capitalization exceeded the expected company value for five years from now, making it difficult to consider EcoPro as a good stock.

Earlier, Samsung Securities also changed its recommendations to neutral from buy. saying that EcoPro’s stock price was significantly overvalued.

Securities firms predict that there will be no clear factors driving the shares of battery-related stocks until the first half of this year. There are also concerns that the profitability of EV battery companies could deteriorate in the second quarter, as the price of lithium and cathode materials falls.

In addition, the recent approval of subsidies in return for the establishment of a factory in the U.S. by Chinese battery maker Guoxuan High Tech has raised uncertainty about the supply chain in the U.S.

Samsung Securities said that there were no fundamental factors that would change the estimated short-term profits of the EV battery industry in the first quarter and unlike the previous three months, stock returns last month did not outperform market returns.