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(Bloomberg) -- While declines in chip and Internet giants have put South Korean equities on course for their worst year since the global financial crisis, investors found winners in the electric-vehicle supply chain and defense sector.
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The benchmark Kospi is down about 22% in 2022, headed for its largest loss since 2008. The biggest drags include a 26% decline in Samsung Electronics Co. and a loss of double that size in Kakao Corp., as growth stocks were pummeled worldwide over recession fears.
Other losers included some of last year’s biggest gainers, such as metaverse, video game and crypto stocks. Shares of firms tied to entertainment hits such as Netflix’s “Squid Game” have endured white-knuckled volatility amid fears they could turn out to be one-hit wonders.
“It was a year of suffering for growth stocks,” said An Hyungjin, chief executive officer at Billionfold Asset Management, also noting the “vicious circle” of big directional changes.
The $10.7 billion share float from electric-vehicle battery maker LG Energy Solution Ltd. meanwhile lured investors as they moved away from chip stocks. The Tesla Inc. supplier split off from LG Chem Ltd. has climbed 53% since its January debut and become the No. 2 weighted stock in the Kospi.
The global race to increase arms spending generated an export windfall for Korean defense firms. Korea Aerospace Industries Ltd., Hanwha Aerospace Co. and Hyundai Rotem Co. have seen their stocks climb more than 30% each.
Brokerages including Goldman Sachs, Morgan Stanley and Nomura have raised their views on South Korean equities for next year, citing cheap valuations, a possible rebound in memory chip stocks and potential benefits from China’s reopening.
Here are some other winners and losers in the Korean stock market in 2022.
Winner: Hydro Lithium +1,515%
The biggest gainer in Korea this year was created when the new owners of little-known civil-engineering firm Korea SE Corp. changed its name to Hydro Lithium Inc. and created ambitious plans for new businesses in fields from EV battery materials and lithium mining to recycling and renewable energy.
“It added all the hottest business items including lithium into the company’s articles,” said Ahn Hyunsang, chief executive at Korea Investment Research Institute, which offers stock trading classes to day traders. “It’s like trading crypto coins with no substance. I don’t recommend it but people who love volatility could prefer.”