《Lee Min-kyung's Siren》
Lee Min-kyung from TenAsia sounds the alarm on the rapidly evolving entertainment industry, highlighting unseen issues and alerting to threats and changes surrounding the entertainment world.
According to the Korea Exchange on the 4th, major Korean entertainment companies HYBE, YG Entertainment, JYP Entertainment, and SM Entertainment saw their stock prices fall by an average of 16% compared to the closing price on the 27th of last month. SM Entertainment experienced the largest drop at 17.0%. HYBE's stock fell by 7.23% on the first trading day after the conflict began on the 3rd, with an additional 9.04% drop on the 4th. In total, the market capitalization of the four major entertainment companies decreased by 3.6814 trillion KRW, with HYBE losing 2.6038 trillion KRW, SM 448.7 billion KRW, YG 213 billion KRW, and JYP 415.7 billion KRW.
The primary cause of the stock plunge is speculated to be the conflict between the U.S.-Israel and Iran that erupted on the 28th of last month, triggering anxiety among domestic individual and institutional investors. There are pessimistic forecasts that the economic downturn caused by the war could dampen consumer sentiment, potentially affecting performance.
Critic Kim Heon-sik commented, "The entertainment industry tends to contract much earlier than other industries. The economic downturn is likely to shrink the concert industry as well. The anticipation for the lifting of the Chinese ban on Korean content might also diminish."
There are concerns that the war's aftermath could severely disrupt the world tour schedules, a core revenue source for K-Pop agencies. In shareholder forums, worries such as "Will world tours be canceled due to closed air routes?", "Who would invest in entertainment stocks during a war?", and "If the war drags on, concerts can't happen" have been expressed.
Industry insiders have a different perspective. One entertainment insider stated, "General investors, not K-Pop fans or insiders, are largely unaware of how world tours are conducted, which fuels their anxiety," adding, "The Middle East is not a major concert destination, with only one or two cities typically hosting events. Unless the war spreads to the U.S. mainland, the impact is expected to be minimal."
Another industry insider remarked, "These concerns are premature and reflect a misunderstanding of the numbers." He added, "It's only been a few days since the conflict began, so we need to monitor the situation. The entertainment industry, being a software industry without physical factories, is unlikely to suffer performance damage due to the war."
Foreign investors share a similar view of the K-Pop market. On the 3rd, the number of K-Entertainment stocks held by foreigners increased, raising the foreign stock ownership ratio in all four major entertainment companies. This suggests they see the current adjustment as a buying opportunity at lower prices.
Lee Min-kyung, TenAsia Reporter 2min_ror@tenasia.co.kr