Superconductors as possibly the next big thing after AI: What investment opportunities do they bring?

The topic of a revolutionary room-temperature superconductor has recently made headlines. This is after Korean scientists developed a new material, LK-99. This breakthrough could revolutionise many industries. While there are still many hurdles on the road to its development and subsequent commercial exploitation, there is still excitement about its potential wide-ranging benefits. What are the investment opportunities associated with this new hit?

What is known so far:

Korean researchers claim to have developed a superconductor that works at room temperature and standard pressure. This miracle material offers almost no resistance to the passage of electric current and eliminates magnetic fields. It could eliminate all losses in the transmission of electricity, making it possible to use the electricity supply in other areas and achieve zero carbon emissions. It would revolutionise almost every field, from power grids and medical imaging to high-speed trains, quantum computers and nuclear fusion.

Similar energy-efficient materials have been developed in the past. However, this has been done under tightly controlled conditions, for example at extremely low temperatures, and therefore these materials have been unusable in practice. The newly discovered LK-99 is a grey-black compound of lead, copper, phosphorus and oxygen, which reportedly exhibits superconducting properties even at temperatures above 400 Kelvin (126.85 °C, 260 °F).

Interestingly, Chinese scientists have since discovered this breakthrough technology. Indian researchers have also published papers mentioning its successful preparation. If it turns out that LK-99 does indeed have the claimed properties, and if this material can indeed be mass-produced and commercialised, it could revolutionise many industries.

However, there are a number of reasons to believe that the development of LK-99 will take a long time and will encounter many challenges. In fact, the production of superconductors is complex and expensive. Moreover, the technology is in its infancy and technical hurdles such as maintaining superconductivity at room temperature will need to be overcome.

Potential investment opportunities

Shares of a number of South Korean (Duksung, Sunam, Shinsung Delta Tech) and Chinese (Jiangsu Etern, Jiangsu Fasten, Henan Zhongfu, Jinhui Mining) companies related to this technology have been on the rise since the end of July. In addition, the Korea Exchange warned against speculative buying as some stock titles repeatedly reached daily limits. All this at a time of otherwise relatively cautious sentiment following the downgrade of the US credit rating by Fitch. However, thanks to news of new technology, the shares of American Superconductor (AMSC) have also strengthened by around half, and have already gained more than 200 % this year.

It is uncertain whether LK-99 will be the superconductor the world has been waiting for. But at the very least, it could be the impetus for further research and development of technologies that enable more efficient energy use and storage. Of course, investors should carefully weigh the risks and rewards before venturing into this area. However, investment areas that can benefit from this technological advance include:

Green metals such as copper and lead, including through futures or ETFs, for example. Metals used for battery production, such as lithium, cobalt, nickel and manganese.Copper mining companies, such as Southern Copper or Sumitomo Metal Mining.Zinc mining companies (lead is a by-product), such as Teck Resources.Electrical wire manufacturers, such as Sumitomo Electric Industries. Energy storage (battery) manufacturers, such as China's CATL, BYD or LG Energy.

In addition to these core areas, opportunities can be sought in those where the use of similar technologies can make a big difference. These include energy, medical equipment manufacturing, transport and logistics, or technology companies working on quantum computing.