THAAD hits stock-rich Korean entertainers

By Kim Tae-gyu

The dispute over Korea’s air defense system has caused more than 160 billion won damage to leaders of the country’s top-tier entertainment companies, according to Chaebul.com, Sunday.

The local consultancy said YG Entertainment chief Yang Hyun-suk saw the value of his shares in the business bellwether fall the most, from 176.8 billion won to 112.3 billion won this year ― a decline of 64.5 billion won.

SM Entertainment Chairman Lee Soo-man was second with a 56.9 billion won loss, followed by FNC Entertainment founder Han Sung-ho with 33.5 billion won and Keyeast Entertainment head Bae Yong-joon with a 12.3 billion won fall.

The combined losses of the “big four” agencies’ heads, all formerly famous singers or actors, amount to 167 billion won, which observers attributed to the country’s controversial adoption of a U.S. missile defense system.

In early July, the Seoul administration announced a plan to allow the deployment of the Terminal High Altitude Area Defense (THAAD) system next year to tackle North Korean missile threats. But the measure angered China because the system’s radar can also monitor airborne objects in the communist country.

Investors instantly understood that the soured Sino-Korean relationship would wreak havoc on Korea’s entertainment industry, which heavily depends on the world’s most populous country, and started selling their shares.

Korean soap operas and other pop culture have enjoyed immense popularity in China and the Korean Wave ― Hallyu ― has boosted the top and bottom lines of entertainment firms such as YG and SM.

But in the aftermath of the THAAD decision, news reports said Beijing was set to engineer a boycott of Korean entertainment and some related events were cancelled there.

Against this backdrop, SM’s share price depreciated by up to 25.5 percent after the THAAD announcement in early July through last week and that of YG tumbled 20 percent.

Of note is that another major player, JYP Entertainment’s owner Park Jin-young, saw his shares in the company appreciate from 26.7 billion won to 27.5 billion won during the period.

The stock worth of JYP also has substantially dipped since early July but the drop was cancelled out by the rise in the first half of the year.

“Entertainment stocks are affected most by Chinese issues,” Chaebul.com CEO Chung Sun-sup said. “The chances are that they will suffer from another downturn when THAAD is actually deployed.

“The biggest concern is that anti-Korean sentiment springs up in China so that the Korean Wave loses steam there.”

Musical star Ham Yeon-ji experienced bad luck regardless of the political issue, with her shareholdings in Ottogi almost halving, from 50.2 billion won to 26.6 billion won this year.

The stock-rich celebrity is the daughter of Ottogi Chairman Ham Young-joon. The food maker’s share price also almost halved due to business performance woes this year.