South Korea battery ETFs surge on AI data centre demand

Exchange-traded funds (ETFs) tied to secondary battery makers took eight of the 10 top spots on the South Korean stock market in October, Yonhap reports.

Investors have been buying into the battery sector on the view that the expansion of artificial intelligence (AI) data centres will drive demand for power supply. Data from the Korea Exchange (KRX), which operates the country's main bourse, showed that battery-linked products made up most of the month's best-performing listed ETFs.

The KODEX Secondary Battery Industry Leverage ETF, run by Samsung Asset Management Co., delivered the strongest return, rising 19.94% between the start of October and October 8. Mirae Asset Global Investments Co.'s TIGER KRX Second Battery Top10 Leverage ETF came second with an 18.45% gain over the same period.

Market watchers told the news agency that the purchases of battery-related funds appeared to be driven by hopes that the ESS segment would benefit from growth in the AI industry.

Kim Gwi-yeon, an analyst at Daishin Securities Co., kept an "overweight" rating on the sector.

"Order momentum toward the end of this year is expected to be followed by share price momentum next year driven by improvements in sales and profitability of ESS businesses," Kim said according to Yonhap.