Domestic secondary battery stocks were strong on the 26th as concerns over the early end of subsidie..

South Korean battery-related stocks, including LG Energy Solution (+3.73%), Samsung SDI (+3.62%), and SK Innovation (+2.96%), rebounded following news that the U.S. House of Representatives passed a bill moving the end of the Advanced Manufacturing and Production Tax Credit (AMPC) to 2031 instead of potentially earlier, easing market concerns about its complete abolition; however, analysts suggest this rebound may be temporary due to widening technology and market share gaps with China.

Analysis

South Korean secondary battery and material stocks experienced a notable rebound, exemplified by LG Energy Solution closing up 3.73% at 278,000 won, Samsung SDI rising 3.62% to 166,000 won, and SK Innovation, SK On's parent, increasing 2.96% to 83,500 won. This upward momentum extended to material suppliers, with cathode material producers EcoproBM (+2.27%), LG Chem (+2.91%), and POSCO FutureM (+1.80%) all gaining. Lithium business operator POSCO Holdings (PKX) rose 3.43%, while copper foil producers SKC and Lotte Energy Materials jumped 8.02% and 2.64% respectively. The KRX secondary battery top 10 index reflected this trend, rising 3.28%, a significant recovery given its 13.43% decline earlier in the month. The primary catalyst for this rally appears to be legislative developments in the U.S., where the House of Representatives passed a bill moving the expiration of the Advanced Manufacturing and Production Tax Credit (AMPC) to the end of 2031, a year earlier than the previous end of 2032. This decision alleviated acute market concerns about a potential complete abolition of the AMPC or a more drastic shortening of its availability to 2028, fears which had previously driven LG Energy Solution's stock below its 300,000 won public offering price. Despite this positive development and the maintenance of the tax credit's size, securities firms express caution, with SK Securities researcher Park Hyung-woo highlighting that the rebound may be temporary due to a widening technology and market share gap with Chinese competitors.

Key Decisions for Investors

• Investors should recognize the recent rally in South Korean battery stocks as primarily driven by a partial de-risking of U.S. tax credit policy rather than a fundamental shift in competitive dynamics.
• It may be prudent to view the current rebound with caution, as analysts suggest it could be short-lived due to ongoing competitive pressures and a widening technology gap with Chinese manufacturers.
• Monitor long-term indicators such as market share evolution, technological advancements, and capital expenditure plans of these companies relative to their global, particularly Chinese, peers before significantly altering investment positions based on this AMPC news alone.