Entertainment stocks send rebound signals amid return of star singers

Despite lingering concerns over the latest sex scandal surrounding a former K-pop boy band member, shares of major entertainment management agencies here are showing signs of rebounding, analysts said Sunday.

Steering the possible rally could be a series of recent album releases by popular artists, such as Blackpink, EXO and Twice, and the upcoming discharge of megastar G-Dragon from military service.

“There have been plunges in share prices across the entertainment sector amid dampening investor sentiment following the latest scandal,” Ji In-hye, an analyst at Hanwha Investment & Securities, said. 

“But due to the strong standing local music streaming industry coupled with the globalization of K-pop, there are many existing factors that will lead to a rebound of the shares in April.”

Among the three major K-pop agencies -- YG, S.M., and JYP -- YG’s shares have been affected the most in recent weeks, as it has been directly linked with the scandal involving Seungri, a former member of its boy band Big Bang. Despite terminating its contract with the disgraced star, the company has continued to face pressure from authorities over its alleged involvement in tax evasion.

According to the Korea Exchange, YG Entertainment’s shares closed 0.75 percent lower at 37,750 won ($33.17) on Friday. The closing price was 26.69 percent lower than its peak price of 50,800 won on Jan. 7, while its market value declined around 237.3 billion won during the same period.

Meanwhile, fellow industry leader S.M. Entertainment closed 0.25 percent lower at 40,500 won on Friday, but JYP Entertainment, considered the least affected by the scandal, gained 0.15 percent to 32,500 won.

However, serving as fresh momentum was YG’s popular girl group Blackpink’s new EP “Kill This Love,” released Friday.

The album gained global attention hours within its release, with the music video for the track “Kill This Love” reaching 70 million views on YouTube in less than 38 hours -- beating the previous record held by boy band BTS.

In addition, G-Dragon’s return to the K-pop industry in November after serving his mandatory military service could work as a game changer for YG’s stocks in the fourth quarter.

S.M. is expected to stand strong with new projects lined up for the rest of the year. It recently released a solo EP by Chen, the main vocalist of boy band EXO.

JYP is expected to see further gains, as it debuted a new girl group, ITZY, earlier this year. Another JYP group Twice is expected to release a new EP on April 22, and recently completed its three-week tour of domed arenas in Japan, attracting 220,000 fans.

“JYP is expected to expand its profit through concerts and sales of merchandise and S.M. will further grow on its solid demand of music overseas,” said Nam Hyo-ji at KTB Investment & Securities.

“YG is also expected to see better profits in digital contents and concerts, but in order for it to gain ground, the probe into the ‘Seungri scandal’ must wrap up and it needs to give a sense of trust to the investors regarding its artist management,” she added.

By Jung Min-kyung (mkjung@heraldcorp.com)