Shares of South Korean enterprises specializing in the production of electronics components are rising amid US sanctions against Chinese companies
Shares of the South Korean cathode manufacturer Ecopro Co have outperformed the shares of all other companies from the Bloomberg world index (2,647 participants), providing a return of 571% since the beginning of 2023, the publication writes.
The yield of these securities is 200% higher than Kum Yang Co, which took second place in the rating. The South Korean company also produces components for electric vehicle batteries. Bloomberg associates investor interest in Korean battery manufacturers and their suppliers with the fact that a number of their Chinese competitors have fallen under US sanctions. In early October, the United States imposed sanctions against 42 Chinese firms.
The list included mainly companies working with electronics and technology. At the end of the same month, three more Chinese companies fell under sanctions; the United States accused them of transferring technology to Pakistan for the production of ballistic missiles. The stock’s gains were driven in part by expectations of increased orders for electric vehicle batteries earlier this year. The rise continued even as some analysts cut their demand forecasts.
As Bloomberg notes, before the government’s recent ban on short selling, Ecopro shares were one of the most popular among short sellers in South Korea. Let us remind you that the country introduced a ban on short selling of shares from November 6, 2023 until June 2024.
Regulators said the move was necessary to stop illegal trading tactics routinely used by hedge funds and other investors around the world. Following this decision, the South Korean stock market rose sharply.
