LG Energy Solution’s
shares rose sharply Monday, leading the rally in battery stocks on a resumed ban on short-selling in South Korea.
Shares of the South Korean electric-vehicle battery maker jumped as much as 24% to 500,000 Korean won ($381.77), their sharpest daily percentage gain since listing in January 2022, outperforming the benchmark Kospi’s
gain of more than 4% in afternoon trading. Other local EV battery stocks, Samsung SDI and SK Innovation, were also last up around 10%.
The rally was largely driven by South Korean financial regulators’ move to reimpose a ban on stock short-selling from Monday for eight months, which prompted traders to cover their earlier short positions for rechargeable-battery stocks, Shinhan Securities said in a note Monday.
Foreign investors were net buyers of local stocks, especially rechargeable-battery makers, after the resumption of the ban on short-selling, a trading practice of earning profit by betting that shares would decline, according to Shinhan.
Financial regulators in Seoul said the ban, which was last lifted in 2021, will be in place until the end of June 2024.
The ban will allow regulators to expand a probe into investment banks’ alleged wrongdoing over the practice of selling borrowed shares and buying them back later at a lower price to earn profits. Regulators said they would also seek to protect the interest of retail investors by revamping the trading practice.
The battery-driven rally Monday led the country’s tech-heavy Kosdaq market to surge over 6% and suspend trading briefly in the second-tier market.
Strong foreign buying of local equities and renewed risk appetite following Wall Street’s recent gains sent the Korean won to a three-month high against the greenback Monday, with USD/KRW falling 1.7% to 1,299.55–the lowest level since early August.
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