Foreign investors are drawn to K-pop because of their expanding global popularity

More investors are buying entertainment stocks because of K-pop’s global expansion, especially to the U.S.

According to the Korea Exchange on the 20th, HYBE rose 43.26% for a month (March 20th -April 20th). During the same period, JYP Entertainment rose 19.69% and YG Entertainment rose 9.44%.

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SM fell 8.85% from a month ago due to management dispute. However, the current share price, which is in the early 100,000 won range, is high, compared to the 70,000 won range at the beginning of the year.

Foreigners have bought 218.3 billion won worth of HYBE in the KOSPI market over the past month, and net bought SM, JYP and YG Entertainment for 21.1 billion won, 62 billion won, and 19.1 billion won in the KOSDAQ market, respectively. Institutions also bought 82.5 billion won for HYBE, 46.4 billion won for SM, and 31.8 billion won for YG Entertainment.

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The recent popularity and index of the group BTS Jimin and BLACKPINK in the global market is believed to have ignited foreign and institutional buying. Jimin entered the U.S. Billboard Hot 100 and Billboard 200 for three consecutive weeks, and the index also topped the Billboard Global 200 chart for two consecutive weeks.

In particular, the fact that HYBE and JYP Entertainment are set to debut new groups in the U.S. also raises expectations. HYBE plans to hold auditions with Universal Music in the U.S. in Korea, Australia, and the U.K. and debut as a girl group in the U.S. JYP Entertainment will also start the girl group A2K project in the U.S. with Republic Records in May.

Lee Ki Hoon, a researcher at Hana Securities, explained, “If HYBE’sand JYP’s U.S.-oriented girl groups of are successful, the maximum expected sales per group are expected to be 500 billion won to 700 billion won and operating profit is expected to be around 50 billion won.”

Solid fundamentals are also the reasons why foreigners are attracted to and acquiring entertainment stocks. The financial investment industry estimated the combined operating profit of HYBE, JYP Entertainment, SM, and YG Entertainment at 114.8 billion won. In the second quarter, combined operating profit is expected to reach a record high of 179.8 billion won. This is because BTS Suga, SEVENTEEN, LE SSERAFIM, aespa, and EXO will make a comeback in the near future. Moreover, HYBE and YG are about to debut their rookie groups. 

Stock markets are raising their target stock prices one after another, predicting that the momentum of entertainment stocks will continue for the time being. 

Cha Yoo Mi, a researcher at Mirae Asset Securities, said, “We present HYBE as the top pick in the industry,” adding, “The number of intellectual property (IP) that can be active in North America continues to grow and is easy to expand global fandom, which is expected to grow the highest among entertainment companies.”

Source: Edaily 

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