Pandemic changes pecking order of Seoul bourse

Bio, IT industries enjoy market cap growth amid pandemic

By Anna J. Park

The extensive impact of the COVID-19 pandemic is changing the order of the largest companies by market capitalization, accelerating the nation's industrial transformation.

While traditionally big players like Hyundai Motor were hit hard by the global pandemic, IT-based companies like mobile platform business Kakao and game developer NCSOFT newly entered the top 15 largest companies list. Biopharmaceutical businesses and secondary battery manufacturers are also enjoying increased market capitalization with stock price hikes.

According to the bourse operator Korea Exchange, the list of the country's top 15 largest companies by market cap as of May 13 this year, when compared to a year ago, has seen strong newcomers.

Kakao, the mobile platform provider behind Korea's largest messenger app, was ranked in 11th place, up 12 spots from a year ago when it was ranked as the 23rd-largest company by market cap. During trading on Thursday and Friday, Kakao's market cap even surpassed that of Hyundai Motor, the nation's largest motor conglomerate.

NCSOFT, one of the world's top video game developers, has also made the top 15 list, up 11 spots from a year ago when it was ranked 26th. IT companies like Kakao and NCSOFT are considered to have received industrial benefits from the spread of the global pandemic, as people spend more time at home, reducing direct contact with others. The stock prices of the two companies have increased by 41 percent and 33 percent, respectively, since the end of last year.

Samsung SDI, the battery affiliate of Samsung, has also seen its market cap rise rapidly, up by 10 spots from last year's 19th place, as it is expected that there will be increasing demand for electric vehicles.

Along with the increased market caps of biopharmaceutical companies like Samsung Biologics and Celltrion, investors are also opting to buy more stock in LG Household & Health Care ― a manufacturer of daily necessities, cosmetics and beverages.

Meanwhile, conglomerates from the auto and steel industries ― traditional power houses of the Korean economy ― such as Hyundai Motor, Hyundai Mobis, and POSCO, witnessed their rankings fall. Financial groups like Shinhan and KB were also thrown out of the top 15 list.

“The rise of companies of the Fourth Industrial Revolution, as well as the fall of traditional industries, are an industrial restructuring process that has been going on even before the spread of the COVID-19,” Kim Hak-kyun, head of research center at Shinyoung Securities, explained.

“The global pandemic has strengthened the industrial transformation that has already been taking place,” he said, adding that investors need to closely follow the stock market, focusing on whether a company's stock price reflects these trends and changes.