Investors increase holdings in entertainment stocks amid K-pop comeback hopes

BTS members talk during a live broadcast on the global platform Weverse, Tuesday / Capture from internet

Major foreign and institutional investors are rushing to significantly increase their holdings in key entertainment firms, buoyed by expectations of comebacks from top K-pop groups including BTS and BLACKPINK, and overall growing optimism over Korea-China relations, market watchers said Thursday.

Foreign and institutional investors, including the National Pension Service (NPS), are leading the rally.

Foreign investors and institutional investors bought 327.1 billion won ($240 million) and 19.9 billion won of SM Entertainment shares, respectively.

The former also bought 158.4 billion won of HYBE shares and the latter 157.6 billion won.

The NPS bought 390,182 shares of YG Entertainment, increasing its stake to 7.24 percent, up from 5.15 percent.

Earlier in May, the pension fund also bought 48,532 shares of JYP Entertainment.

Analysts say the increase in holdings is attributed to the entertainment agencies’ solid fundamentals and strong earnings expected in the months to come.

Revenue will be bolstered due to income from concerts and album sales, certain to rise since BTS member Suga completed his mandatory military service on June 21, leading to the reunion of all seven members.

The globally reknowned boy band said on July 1 that they plan to release a new album and go on a world tour as a group in spring of next year.

China reopening to Korean entertainment will further boost K-pop’s popularity.

Expectations are also mounting that Chinese leader Xi Jinping could visit Korea in November, a clear sign of improvement in bilateral ties.

Daishin Securities analyst Lim Soo-jin said entertainment agencies will be able to post robust revenue in the latter half of this year.

“A growing number of them will go on world tours, translating to handsome revenue,” the analyst said.

“Ticket sales and other goods featuring idol group members will result in earnings that surpass market expectations.”

According to FnGuide, a financial data service provider, the combined operating profit for Korea’s four major entertainment companies — SM, YG, JYP and HYBE — will increase to 674.1 billion won this year, up 76.9 percent from the year before.