Korean Entertainment Stocks Struggle Amid Market Shifts and Chinese Restrictions
In the current bullish domestic stock market, entertainment-related stocks are showing a downward trend. This decline is attributed to a concentration of demand in large semiconductor stocks and the fading expectations regarding the lifting of Chinas ban on Korean cultural content, known as the Hallyu restriction. Experts predict that stock prices could rebound due to upcoming events such as the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju and the anticipated comebacks of popular groups like BTS.
According to the Korea Exchange on the 23rd, the ACE KPOP Focus exchange-traded fund (ETF) has fallen by 6% over the past month. Major components such as HYBE (-1.9%), SM Entertainment (-18.3%), JYP Entertainment (-2.4%), YG Entertainment (-7.4%), and YG PLUS (-25.4%) have all experienced declines during this period.
The sluggish performance of entertainment stocks is attributed to the cancellation of several scheduled concerts in China and a shift in demand towards leading semiconductor stocks. Notably, the 2025 Dream Concert that was supposed to take place in Hainan, China, with an expected attendance of 40,000, was suddenly postponed at the end of last month. Additionally, solo concerts for idol groups Kep1er and IVE were also postponed or canceled. While the specific reasons remain unclear, it is speculated that the Chinese governments approval has not been granted.
Market analysts believe that the fundamentals of entertainment stocks remain intact, suggesting that they will soon find opportunities for a rebound. The visit of Chinese President Xi Jinping to South Korea for the first time in 11 years during the APEC summit is seen as a positive sign for the industry.
An analyst at Shinhan Investment Corp noted, "The short-term momentum has been dampened by uncertainties regarding China, causing stock prices to fluctuate. However, even without concerts in China, we are seeing stable growth in revenue from fan meetings and pop-up stores in the Chinese market."
Another analyst from Kiwoom Securities stated that the decline in entertainment stocks is a temporary phenomenon, influenced by high returns at the beginning of the year and a shift in demand towards semiconductor and secondary battery stocks.
According to the Korea Exchange on the 23rd, the ACE KPOP Focus exchange-traded fund (ETF) has fallen by 6% over the past month. Major components such as HYBE (-1.9%), SM Entertainment (-18.3%), JYP Entertainment (-2.4%), YG Entertainment (-7.4%), and YG PLUS (-25.4%) have all experienced declines during this period.
The sluggish performance of entertainment stocks is attributed to the cancellation of several scheduled concerts in China and a shift in demand towards leading semiconductor stocks. Notably, the 2025 Dream Concert that was supposed to take place in Hainan, China, with an expected attendance of 40,000, was suddenly postponed at the end of last month. Additionally, solo concerts for idol groups Kep1er and IVE were also postponed or canceled. While the specific reasons remain unclear, it is speculated that the Chinese governments approval has not been granted.
Market analysts believe that the fundamentals of entertainment stocks remain intact, suggesting that they will soon find opportunities for a rebound. The visit of Chinese President Xi Jinping to South Korea for the first time in 11 years during the APEC summit is seen as a positive sign for the industry.
An analyst at Shinhan Investment Corp noted, "The short-term momentum has been dampened by uncertainties regarding China, causing stock prices to fluctuate. However, even without concerts in China, we are seeing stable growth in revenue from fan meetings and pop-up stores in the Chinese market."
Another analyst from Kiwoom Securities stated that the decline in entertainment stocks is a temporary phenomenon, influenced by high returns at the beginning of the year and a shift in demand towards semiconductor and secondary battery stocks.
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