Hyundai Motor Co. and Kia Corp., South Korea’s top two automakers, remained sluggish in the local stock market despite their hydrogen industry ambitions. Their share prices have been correcting for about eight months since Hyundai Motor Group said it was not engaged in talks with Apple Inc. over the development of an autonomous electric vehicle.
Shares in Hyundai and Kia are expected to stay under pressure given the recent automotive chip shortage even as they remain attractive for mid- and long-term investment, analysts said.
Hyundai on Sept. 13 lost 0.73% to end at 205,000 won ($174.5), extending its loss from this year’s peak to 23.36%. Kia has also skidded 18.62% from its high in 2021. They far underperformed a 1.12% decline in the wider Kospi.
Individual investors who made big bets on the country’s leading automakers fell into a panic. Retail investors have been accumulating Hyundai and Kia, betting on the growth potential of eco-friendly cars and possible cooperation with Apple on EVs.
Those investors have bought a net 2.8 trillion won ($2.4 billion) worth of Hyundai’s shares so far this year, the sixth-largest stock net purchased by individual investors after Kakao Corp., according to the Korea Exchange data. They have also purchased a net 1.2 trillion won in Kia shares.
Hyundai and Kia’s stocks are attracting younger investors who are aggressively betting on growth in the future mobility industry. According to Mirae Asset Securities, this year its customers in their 30s have bought more Hyundai shares than those of Kakao and Naver Corp. Hyundai was also the No. 4 most-coveted stock for customers in their 20s after Samsung Electronics Co., Kakao and SK Hynix.
“I’d choose Hyundai Motor over Samsung Electronics if I had to select shares of one to leave my children,” said a local asset management company’s chief investment officer.
According to NH Investment & Securities, Hyundai ranked fourth in the most-added stocks in underage accounts as of end-June.
FUTURE GROWTH POTENTIAL INTACT
Hyundai and Kia have not lost growth potential in the longer term despite the recent automotive chip shortage, analysts said.
“Operations at most local plants are expected to normalize from October,” said an eBest Investment & Securities analyst Yoo Ji-woong. “Their valuation merit is clear as their stocks are undervalued with a price-to-book ratio of 0.8 times in Hyundai and 0.9 times in Kia.”
Hyundai and Kia are expected to beat their European and Japanese competitors in the global EV market, Samsung Securities analyst Lim Eun-young predicted.
“As EV conversion accelerates, Hyundai and Kia are likely to escalate their positions among the global top-tier EV makers, encroaching on the positions of European and Japanese companies in the US and European markets,” Lim said.
