Stock polarization deepens among top 10 conglomerates

An electronic trading board at Hana Bank headquarters in central Seoul shows the benchmark KOSPI gaining 0.84 percent to reach an all-time closing high of 4,624.79 points, Monday. The index extended its winning streak to a seventh consecutive session, surpassing the 4,600-point mark at closing for the first time in history. Yonhap

The top 10 conglomerates listed on the KOSPI are experiencing increasing polarization in market capitalization, reflecting a broader trend of widening disparities now spreading among peer business groups, according to market watchers Monday.

This polarization corresponds with global business developments, with second-ranked SK Group, driven by global chip demand, and seventh-placed Hanwha Group, supported by U.S. shipbuilding cooperation, standing out among the top 10 as each surged toward 200 percent over the past year.

In contrast, share price growth was less than 10 percent for fourth-largest LG Group and 20 percent for sixth-ranked POSCO, as a slowdown in secondary batteries and steel held back performance in each core business.

“The widening gap among top-tier companies suggests that polarization is no longer limited to typical divides between the rich and the poor or between conglomerates and small and medium-sized enterprises (SMEs),” Jung Eui-jung, head of the Korean Stockholders’ Alliance, said.

“A bullish KOSPI does not guarantee returns and therefore investors should carefully track conglomerates’ businesses in the context of global trends.”

Jung pointed to the benchmark KOSPI gaining nearly 82 percent over the past year through last Friday, closing at 4,586.32 points and fueling optimism for surpassing an unprecedented 5,000 points this year.

He also pointed out that the combined market capitalization of SK Group’s affiliates surged 190.6 percent to about 445 trillion won ($303.05 billion) over the same period.

The growth was led by chipmaker SK hynix, with a market cap rising 263 percent to approximately 514 trillion won, and also by SK Square, which has its stakes tied to SK hynix, jumping 349.9 percent.

As for Hanwha Group, its market capitalization grew 188.3 percent, driven by its defense affiliate Hanwha Aerospace which soared 250.3 percent, and its shipbuilding arm Hanwha Ocean which rose 200.3 percent, amid the U.S.-China tensions and America’s push to revive its naval shipbuilding industry in cooperation with Korea.

While it lagged behind SK Group and Hanwha Group, top-ranked Samsung Group also stood out, rising 110.7 percent to become the country’s first conglomerate with a market capitalization exceeding 1,000 trillion won.

The surge was driven by Samsung Electronics, which rode the global semiconductor supercycle, climbing 145.7 percent to reach a market capitalization of more than 822 trillion won.

Another shipbuilding-focused conglomerate, eighth-ranked HD Hyundai, saw its market capitalization rise 109.3 percent.

The country’s third-largest conglomerate, Hyundai Motor Group, posted a moderate 71 percent increase in market capitalization.

LG Group was the lowest-performing among the top 10 conglomerates, with its market capitalization ticking up just 7.8 percent, as slow demand in electric vehicle batteries led LG Energy Solution to gain only 1.3 percent. Another key affiliate, LG Electronics, rose just 3.4 percent.

Fifth-ranked Lotte Group was also constrained by its heavy reliance on domestic demand-sensitive sectors, with its market capitalization increasing only 14 percent.

POSCO Group improved by just 19.4 percent, weighed down by slower steel demand.