Korean core companies’ stocks underperform global peers

The world sought new opportunities in 2021, recovering from the shock of the COVID-19 pandemic. Global major companies have been in cutthroat competition to take the lead in the potential megatrend industries such as metaverse and electric vehicles. South Korean firms such as Samsung Electronics Co., Naver Corp., Hyundai Motor Co. and LG Chem Ltd. have joined the race.

Their stocks, however, underperformed those of their global competitors since investors chased shares in industry frontrunners. US companies dominated the information technology sector, while Chinese firms stood out in the secondary battery business.

The Korea Economic Daily compared the share price performance of top companies in the internet, semiconductor, EV and battery sectors by market capitalization in China, Japan, South Korea, Taiwan and the US as of Dec. 15 of this year.

MICROSOFT, NVIDIA SHINE ON METAVERSE, AI

Global Big Tech stocks continued their rallies this year since investors hailed US and South Korean internet companies’ expansion in new growth engines such as the metaverse with strong profitability. Microsoft Corp.’s stocks jumped 50.46% as growth in its cloud service powered its revenue. It also unveiled a plan to provide comprehensive solutions for the metaverse, raising investors’ hopes for its future businesses.

Naver’s shares advanced 32.48% on strong performance in Naver Pay, its digital wallet service, and Naver Smart Store, its online shopping mall solution. Naver Z Corp., the operator of Naver’s metaverse platform Zepeto, raised its corporate value through an investment from Softbank and others.

Among semiconductor producers, stocks of Nvidia Corp., the world’s largest maker of graphics and artificial intelligence (AI) chips, soared 133.31%. Nvidia released Omniverse Enterprise, a set of software tools that allow companies to collaborate in building virtual worlds, the computing power for which comes from Nvidia’s chips. Investors saw the platform as essential for the metaverse.

The surge in Nvidia’s stock price forced Taiwan Semiconductor Manufacturing Co. (TSMC) to give up the throne as the world’s most valued chipmaker. TSMC and Samsung underperformed Nvidia on worries about parts procurement amid the global supply disruption. TSMC rose 13.64%, while Samsung lost 4.2%.

TESLA, CATL

South Korean companies fell behind US and Chinese rivals in the global EV and battery industries. In the EV sector, Tesla Inc., which dominates the global EV and autonomous driving sectors, maintained its lead with its share price up 38.31% despite a series of stock sales by CEO Elon Musk. On the other hand, Chinese EV maker Nio Inc.’s stocks tumbled 36.83% hurt by sluggish sales.

Conventional automakers have been catching up to join the paradigm shift of eco-friendly vehicles. Toyota Motor Corp.’s stocks jumped 33.12% as it announced an 8 trillion yen ($70.4 billion) investment plan to electrify its automobiles by 2030.

Hyundai Motor’s share price rose 8.85% as investors paid more attention to production disruptions due to the ongoing automotive chip shortage.

In the secondary battery sector, Contemporary Amperex Technology Co. Ltd. (CATL), the world’s top EV battery producer, enjoyed an 84.84% surge in its share price. Its main lithium iron phosphate (LFP) batteries are cheaper than nickel-cobalt-manganese (NCM) batteries, the main products of South Korean makers, although the LFP cells’ mileage is usually shorter. CATL recently significantly improved the LFP batteries’ mileage and Tesla decided to install the batteries in all of its standard-range EVs.

The world’s No. 2 EV battery maker LG Chem’s stock price lost 14.93% on issues linked to the Chevy Bolt battery recall. The share came under further pressure from the upcoming initial public offering of LG Energy Solution Ltd., the battery unit split off from LG Chem. Panasonic Corp.’s stock grew by 2.56%.

Write to Sulgi Lee at surugi@hankyung.com
Jongwoo Cheon edited this article.