K-pop rookies, fresh boost for Korean entertainment stocks

South Korea’s entertainment stocks are poised to rally as K-pop newbies gain momemtum, attracting not only global music fans but also investors.

SM Entertainment Co., the label behind four-girl band aespa, on Monday surged 5.3% to end at 141,300 won ($106.8), far outperforming a 1.1% gain in the country’s junior Kosdaq market. JYP Entertainment Corp., the agency of the boy group Stray Kids, jumped 3%, while YG Entertainment Inc. of global sensation Blackpink gained 2.3%. HYBE Co. of BTS, advanced 3.2%, compared with a 1% rise in the wider Kospi.

SM's share has been supported since Aug. 21, when its new boy band Riize unveiled their prologue single “Memories," already a big hit among online fandom communities. The seven-member group, the K-pop pioneer’s first male idol band in seven years since NCT, plans to release its first album on Sept 4.

“We have not seen a competitive boy group in the market recently,” said Kim Hye-young, an analyst at Daol Investment & Securities Co. “If Riize creates a fandom when BTS is away for their mandatory military service, that will immediately boost SM Entertainment’s album and music earnings.”

YG’s share hit a record high in June on expectations for its new girl group BabyMonster, which is set to take the stage as early as late September. The band consisting of three South Koreans, two Japanese and two Thai women is YG's first female band after Blackpink, which debuted in 2016.

BabyMonster, which YG hopes will become another Blackpink, has already secured more than 3 million subscribers on its YouTube channel. The band of Jisoo, Jennie, Rosé and Lisa helped YG enjoy record earnings with its operating profit more than tripling in the second quarter, completing 16 concerts worldwide in the April-June period.

FOREIGN MEMBERS

Some South Korean music labels are working to form idol groups composed of foreigners to target the global market.

“They are following the strategy of Samsung Electronics Co. and Hyundai Motor Co., which built plants in other countries to dominate the markets,” said a fund manager in Seoul. “The success of those projects could raise the valuations of entertainment stocks.”

JYP plans to unveil A2K, a band consisting of North American female artists in the second half in cooperation with US agencies. The group is expected to bolster JYP’s operating profit by 50 billion won, analysts said.

The label also is working on projects to create boy bands in Japan and China.

“South Korea, China, the US and Japan will have idol groups focusing on individual markets,” said Choi Min-ha, an analyst at Samsung Securities. “They will diversify sales sources.”

HYBE is set to unveil on Tuesday the 20 idol trainee hopefuls chosen to compete in the final audition to become members of its female version of BTS. The label has selected them through competitions over the last two years.

Write to Han-Gyeol Seon at always@hankyung.com
 
Jongwoo Cheon edited this article.