South Korean battery-material stocks surge on new regulations

  • Posco Future M rallies after new U.S. rules target Chinese rivals
  • Shares of South Korean battery-material supplier climb 11%
  • New guidance restricts Chinese materials in U.S. EV batteries
  • South Korean competitors expected to strengthen dominance in U.S. EV battery supply chain
  • Posco Future M and other South Korean suppliers likely to raise stakes in joint ventures with Chinese partners

Posco Future M, a South Korean battery-material supplier, saw a significant rally in its stock price following the introduction of strict new rules by the U.S. government that target Chinese rivals. The new guidance restricts the use of Chinese materials in electric-vehicle batteries eligible for U.S. tax credits. As a result, South Korean competitors are expected to strengthen their dominance in the U.S. EV battery supply chain. Analysts predict that companies like Posco Future M will increase their stakes in existing joint ventures with Chinese partners, as the U.S. now considers any company with a stake of 25% or more held by a foreign entity of concern (FEOC) as ineligible for EV tax credits. These new FEOC rules will come into effect in 2024 for finished battery products and in 2025 for battery minerals.

Public Companies: Posco Future M (N/A)
Private Companies: undefined
Key People: Jeon Chang-hyun (Daishin Securities analyst)

Factuality Level: 8
Justification: The article provides specific information about the gains in South Korean battery-material stocks and the new rules introduced by the U.S. targeting Chinese rivals. It includes quotes from a Daishin Securities analyst and explains how the guidance will impact companies owned or controlled by a ‘foreign entity of concern.’ The article also mentions the expected actions of South Korean battery-material suppliers. However, the article lacks additional sources or perspectives to verify the claims made by the analyst, and it does not provide a comprehensive analysis of the potential impact of the new rules.

Noise Level: 7
Justification: The article provides some relevant information about the impact of new U.S. rules on South Korean battery-material stocks. However, it lacks in-depth analysis and evidence to support the claims made by the Daishin Securities analyst. The article also does not explore the potential consequences of these new rules on the global EV battery supply chain or the long-term trends in the industry. Overall, there is a moderate level of noise and lack of comprehensive analysis in the article.

Financial Relevance: Yes
Financial Markets Impacted: Battery-material stocks in South Korea

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the impact of new U.S. rules on Chinese rivals in the battery-material industry, specifically in the context of South Korean companies. While there is no extreme event mentioned, the financial markets are directly affected by these new regulations.

Reported publicly: www.marketwatch.com