“The hippopotamus that ate electricity was a fairy”…an unexpected stock that ranked first in profitability

The No. 1 exchange-traded fund (ETF) return this year was the ‘Nuclear Energy ETF’, which invests in nuclear power plants and power infrastructure companies. This is because the nuclear and power infrastructure industries, which will support the inevitable rapid increase in power use in the AI ​​era, have risen more significantly than the AI ​​semiconductors, which are the focus of market attention.

According to the Korea Exchange on the 23rd, the product with the highest ETF return this year was the ‘HANARO Nuclear iSelect’ ETF, which consists of stocks related to facilities, construction, and operation in the nuclear power industry and power infrastructure-related stocks.

This year alone, it is showing a return of over 40%. As of this day, this product contained the largest proportion of HD Hyundai Electric (24.22%), followed by LS Electric (12.77%), Korea Electric Power Corporation (11.96%), and Doosan Energy (10.93%). The ‘ACE Nuclear Theme Deep Search’ ETF also rose 27% this year.

The reason for the high returns of these products is the rise in the stock prices of power equipment industries such as HD Hyundai Electric and LS Electric, which rank 1st to 3rd among constituent stocks. This is because power use has increased rapidly due to the expansion of AI services, and in conjunction with the construction of data centers to respond, the overall power equipment industry is booming.

According to BCG forecasts, data center power demand in the United States is expected to increase by 154% by 2030 compared to 2022, and if additional power demand related to AI occurs, power demand will increase by up to 210%.

PJM Interconnection, a U.S. power grid operator, raised its forecast for electricity demand in the U.S. by 1 percentage point to an annual increase of 2.4% for the next 10 years due to the increase in AI data centers, electrification of transportation and heating, and reshoring such as the CHIPS Act. Adjusted.

If the upward adjustment is converted to power plants, additional expansion of nuclear power plants amounting to approximately 5GW (3 to 5 nuclear power plants) is needed every year. Park Jang-wook, a researcher at Daishin Securities, predicted, “As nuclear energy is an energy source with clear strengths in terms of price and carbon emissions, the increase in electricity demand will lead to the expansion of nuclear power plant construction.”

Kim Hyun-bin, head of ETF investment at NH-Amundi Management, said, “AI data centers are leading to a huge increase in electricity demand, and interest in nuclear power as a stable power source has grown. Amazon recently invested in a data center near a nuclear power plant, and Microsoft “Big tech companies’ investments in nuclear energy are increasing, including the push to supply small module nuclear power plants (SMRs) for data center power,” he said.

As the movement to use ‘nuclear power’ to respond to the increasing demand for electricity in the United States and Europe becomes more solid, the potential for growth is expected to be high. French President Emmanuel Macron said at the Davos Forum at the beginning of the year, “With the advent of the AI ​​era, electricity has become more important. In response, we are working to improve energy efficiency by expanding nuclear power generation.” He said, “We are building six nuclear power plants, and we plan to announce the construction of eight new nuclear power plants around June.”

Even in the United States, where the presidential election is about to be held this year, both President Biden and former President Trump are friendly to nuclear energy. President Biden, who emphasizes new and renewable energy, has already included nuclear power plants in the Inflation Reduction Act (IRA) tax credits during his term, and is also pursuing support for old nuclear power plants. Former President Trump revealed his aspirations for the continued operation of existing nuclear power plants and investment in SMR through ‘Agenda 47’, a collection of his re-election pledges.

In this atmosphere, Constellation Energy (CEG), an American eco-friendly energy power generation company, has seen its stock price rise by 150% over the past year. Constellation Energy, which was spun off from Exelon, a giant U.S. power company, is the largest carbon-free energy producer in the U.S., encompassing nuclear, wind, solar energy, and hydropower resources. This company has the largest number of nuclear power generation facilities among eco-friendly energy generation companies.

However, there is also advice to be careful about short-term stock price volatility due to government policy. Kim Seung-hyeon, in charge of ETF marketing at Korea Investment Trust Management, said, “In the case of stocks related to nuclear power plants, short-term stock price volatility may be seen depending on the success of nuclear power plant orders and the government’s nuclear power plant policy, so this must be kept in mind when investing.”