Hyundai Motor shares under pressure in the face of restrictive IRA law guidelines 📉

Share prices of Korean carmaker Hyundai Motor (HYU.DE) continued their sell-off, losing nearly 5% today. Investor sentiment deteriorated due to higher central bank interest rates, concerns about demand for new cars and the possible negative impact of the U.S. Inflation Reduction Act on the company's U.S. sales. In addition, according to the Korea Automobile Manufacturers Association, South Korean automakers' domestic sales volume this year will be at its lowest level in nine years:

• The U.S. Treasury Department recently announced key guidelines for key minerals and components of electric cars eligible for subsidies under the Inflation Reduction Act (IRA). According to experts, electric cars exported from South Korea to the United States are unlikely to meet IRA restrictions for at least some time, putting demand for Korean EVs in question for at least the first half of 2023. Restrictions on the U.S. market are likely to come with rising sales of electric cars from Tesla and Ford, among others, whose U.S. sales exceeded those of Korean manufacturers Hyundai and KIA last month;
• According to analysts who follow the automotive market, Hyundai Motor's Q4 operating profit and sales will be about 2.8844 trillion won (about $2 billion) and 38.155 trillion won (about $30 billion), respectively, up 88.5% and 23% year-on-year, respectively. Despite the prospects of a slowdown, analysts expect the company's profit to increase and reach about 10 trillion won (about $9 billion) in 2023;

Hyundai Motor's shares are performing significantly worse than the average of the German DAX index this year. Since the beginning of the year, the shares have already lost nearly 26% against 13% declines in the main German benchmark.

Chart of Hyundai (HYU.DE) shares versus DE30 contracts (yellow line). Source: xStation5