Entertainment stocks rallied together during intraday trading Monday. Analysts said the buying was triggered by the view that the sector’s stock declines had been excessive, as demand that had been concentrated in tech sectors such as artificial intelligence (AI) and semiconductors eased somewhat.
According to the Korea Exchange, HYBE was trading at 232,500 won as of 10:20 a.m., up 17,500 won, or 8.14%, from the previous session. SM Entertainment was trading at 83,300 won, up 6,100 won, or 7.90%. JYP Entertainment rose 4.27% to 56,200 won, while YG Entertainment gained 4.94% to 45,700 won.
Media and content stocks also climbed. Studio Dragon rose 7.09% to 23,400 won, and CJ ENM gained 6.26% to 33,950 won. Dexter (7.61%), IOK Company (5.09%) and 4by4 (3.22%) also advanced, as buying spread across content-related shares.
Analysts are focusing on the reduced valuation burden in the entertainment sector. According to Shinhan Investment & Securities, the sector’s price-to-earnings ratio (PER) has fallen from a historical range of 20 to 35 times to the current 12 to 22 times. “A consensus is forming that K-pop is oversold and undervalued relative to its unique fundamentals,” said Ji In-hae, an analyst at Shinhan Investment & Securities. “With sentiment in the entertainment sector improving, led by HYBE, a basket buying opportunity has opened up for KOSDAQ-listed entertainment stocks.”
NH Investment & Securities said in a report the same day that it expects HYBE’s second-quarter earnings to beat consensus. “The overall market’s concentration in tech sectors has led to excessive weakness across entertainment and media shares,” said Lee Hwa-jung, an analyst at NH Investment & Securities. “Although the second quarter shows variation by operator, overall earnings are expected to be solid.” She added, “As the second-quarter earnings reconfirm that the rise in artist distribution rates can be offset by economies of scale, concerns about profitability will also be resolved.”
