Funds betting on lithium-ion rechargeable battery related companies have become one of the most actively traded thematic exchange-traded funds (ETFs) just a month after their launch in the South Korean bourse, according to the Korea Exchange on Wednesday.
Latest KRX data showed on Wednesday that Kospi-listed “Tiger Secondary Cell” ETF’s transaction volume on the same day reached 649,564 shares and marked as the best-selling thematic ETF except those tracking Kospi, Kosdaq futures indices. Retail investors have continued net purchasing the Tiger Secondary Cell as well as another rechargeable battery tech-themed ETF “KODEX Secondary Battery Industry” since their launch on Sept. 12.
Daily transaction volume of the Tiger Secondary Cell averaged 593,538 shares and that of KODEX Secondary Battery Industry 510,221 shares so far. Transaction volumes of the two ETFs have grown steadily during the first 16 trading days since the launch due to the high volatility of lithium-ion battery related stocks, market experts explained. Higher volatility makes security riskier, but such investment often carries high potential returns. The prices of the two EFTs have retreated around 8 percent from the first trading session of this month on average, but retail investors have stayed as net buyers.
The underlying stocks of Tiger Secondary Cell and KODEX Secondary Battery Industry ETFs include shares of the country’s leading lithium-ion rechargeable battery tech companies, namely, Posco ChemTech Co., Samsung SDI Co., and LG Chem Ltd.
Stock prices of those Li-ion battery tech companies had surged until the end of last month but they have reversed course this month ahead of the third-quarter earnings reporting. The news of the Chinese government cutting down electric car subsidies has also weighed on them. Market experts, however, forecast demand for electric vehicles will remain strong, leading retail investors to buy the related stocks at low prices.
In Seoul trading on Thursday, Tiger Secondary Cell closed 5.15 percent lower at 8,845 won ($7.74) and KODEX Secondary Battery Industry 4.38 percent lower at 8,955 won.
By Chung Woo-sung and Cho Jeehyun
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