Korea-China dispute chips away at K-pop stars' wealth

By Park Jin-hai

The dispute over a U.S. Terminal High Altitude Area Defense (THAAD) system to be installed here, continues to wreak havoc on stock-rich Korean entertainers. The stock values of two entertainment moguls ― S.M. Entertainment Chairman Lee Soo-man and YG Entertainment chief Yang Hyun-suk ― have seen their stock values plummet by almost 50 percent compared to a year ago, according to chaebul.com, Monday.

The local consulting site said the value of SM chief Lee’s shares fell the most in the period, from 186.2 billion won to 103.7 billion won on Feb. 3 ― a 44.3 percent decline of 82.4 billion won.

YG chief Yang’s stock values also tumbled to 95.8 billion won, losing 77 billion won, a 44.6 percent decline during the same period. It is the first time Yang’s stock value dropped below 100 billion won since YG’s initial public offering in November 2011.

The combined losses of the 12 biggest stock-rich entertainers, including Lee and Yang, amounted to 239.3 billion won, a 40.7 percent drop.

Keyeast Entertainment head Bae Yong-joon, ranked third in terms of stock value, lost 17.3 billion won, a 28.2 percent fall from 61.5 billion won a year ago. FNC Entertainment founder Han Sung-ho, ranked fourth, posted a 27.3 billion won loss, or a 48.6 percent drop.

Local observers attribute the losses to China’s ban on Korean cultural products in retaliation to the planned THAAD deployment.

Following Seoul’s July 8 decision to deploy THAAD, China has been gradually tightening the noose in its boycott of Korean entertainers and canceling cultural events that had been planned years in advance.

Against this backdrop, SM's share price tumbled by 53.8 percent on Jan. 26, to a 52-week low of 22,350 won per share. YG’s share price dropped to 25,200 won from 48,000 won half a year ago. Compared with its peak of 67,355 won on April 16, 2013, its stock price nearly shrank to one-third.

According to data by financial information provider FnGuide, between July 1 and Aug. 31 alone, when the THAAD issue had started casting a shadow on entertainment companies, who rely heavily on the Chinese market, Lee’s stock value lost 39.6 billion won and Yang lost 29.5 billion won.

Experts see difficulties for the entertainment companies’ share prices to rebound significantly this year because the THAAD and hostile exchange rate issues are expected to continue.

“Investors should wait and see for a while,” a local analyst said. “As long as the Chinese risk factor in relation to THAAD persists, it will be hard to expect a sudden rebound in the companies’ stock prices.”