BTS Attaches Wings to Korean Entertainment Stocks

Idol boy band BTS is having a significant effect on the stock market. For the five days after BTS topped the US billboard album chart, Billboard 200, on May 28, the stock prices of entertainment companies shot up, including Keyeast (55.72%), JYP Entertainment (12.01%), and Studio Dragon (14.52%). The corporate value of Big Hit Entertainment (BTS’ management company), which has IPO planned next year, is estimated to be more than 1 trillion won.

BTS’ big success is making investors pay attention to the growth potential of domestic entertainment companies, as a fierce competition is underway among streaming companies such as Netflix and YouTube to secure creative content. These streaming companies are spearheading the Fourth Industrial Revolution of the media.

The trend in the music industry is changing from downloading to streaming (real-time playback). With the spread of smartphones and the advancement of communications technology, music and videos can be enjoyed anytime anywhere. The change in the way people consume music and videos has created a favorable environment for K-pop, which combines musicality and fancy choreography. BTS and Twice are thought to be the most suitable groups for this environment. Since 2017, the YouTube view counts of the two groups reached 3.2 billion and 1.9 billion, respectively.

"The global streaming companies are investing aggressively to secure creative content differentiated from their competitors. This would boost the value of competitive Korean entertainment enterprises," said Lee Ki-hoon, a researcher of Hana Financial Investment. Foreign investors are also taking note of entertainment stocks. This year, foreigners bought SM and JYP Entertainment in the KOSDAQ market for 45.4 billion won and 43.5 billion won, respectively.

The total market value of eight major entertainment companies listed on the Kosdaq market has increased by 1.75 trillion won (22.24%) this year, an impressive increase compared with the 1.53% and 2.01% gain in market capitalization of the Kospi and Kosdaq markets during the same period.