K-pop artists come under intense scrutiny from fans and their agencies. (document)
South Korea’s K-pop industry is booming, but investors in its stocks are vulnerable to losses.
According to analysts, the industry is worth around $5 billion thanks to now-famous artists like BTS and Blackpink, and continues to grow as more people around the world get involved . That’s boosted the share price of K-pop star agencies and turned big names like Hybe Co.’s Bang Si-Hyuk into billionaires.
Still, the industry remains highly dependent on the actions of a handful of key players, and negative news about its stars can wipe out millions of dollars in market value.
Consider what happened a few weeks ago: One of South Korea’s biggest pop stars had a boyfriend, and her agency’s stock price plummeted.
The news about Aespa group singer Karina sparked outrage from fans, some of whom even sent a truck with an electronic billboard that read “Don’t you get enough love from your fans?” The company’s in South Korea The stock price fell 11%, and Karina, whose real name is Yoo Jimin, issued an apology.
Although the stock has since recovered, the incident illustrates the dangers the industry faces for both stars and investors.
So, should you turn your love for K-pop into an investment? Here’s what you need to know:
What are the reasons to invest in K-pop?
It has a huge fan base around the world, with Sanford C. Bernstein senior analyst Bokyung Suh estimating the number at about 500 million. This number continues to grow as more and more music lovers discover the genre. He estimates that the industry will grow at a compound annual growth rate of 12% by 2030.
Lars Ognarsson, head of research at Jakota Index Portfolios, said a surge in demand for concerts and rising ticket prices should boost profits for the companies behind K-pop. He is also optimistic about increased album sales and continued expansion of overseas business.
“Digital streaming of K-pop is soaring, with a significant increase in English-speaking markets,” he said.
Additionally, he noted that Hybe is expanding its presence in the global music industry through mergers and acquisitions. The company acquired its first Latin music company in November, following its acquisition of US-based QC Media Holdings.
What are my options?
First, the major players: There are four major companies behind most K-pop stars — Hybe, SM Entertainment, JYP Entertainment Corp. and YG Entertainment Inc.
Hybe is best known for the boy band BTS (also known as the Bangtan Boys), who arguably made the entire K-pop industry a global phenomenon. SM is the driving force behind Karina’s Aespa, as well as Super Junior and Girls’ Generation, among others. JYP’s artists include Stray Kids, Boy Story and 2PM, while YG is known for Blackpink and BigBang.
They are both listed on the South Korean stock exchange, which can be difficult for foreign investors to gain access to, although the country’s regulators are working to make it easier.
For U.S. investors, there’s Jakota K-Pop and the Korea Entertainment ETF (KPOP), which invests in companies that will benefit from industry growth. Its largest holdings are Internet services companies Kakao Corp. and Naver Corp., as well as SM and Hybe. The fund’s price has fallen nearly 15% so far this year.
In Hong Kong, one option is the newly launched Global X K-Pop and Culture ETF (3158 HK), which counts Hybe and media production company CJ ENM Co. as its largest positions.
What are the risks?
One of the biggest headwinds the industry has faced in recent years has been the news that BTS will suspend its focus on individual projects, causing Hybe’s share price to plummet 28%, wiping out as much as $1.7 billion in market value. Under South Korean law, able-bodied men must complete 18 to 21 months of military service, and two BTS members began serving in December.
Although the stock price has since recovered, the incident illustrates BTS’s influence on the world of K-pop.
Stocks in general are notoriously volatile, which can be especially dangerous for those who don’t invest for the long term. Take Hybe’s stock price, for example: In 2023 alone, the company was up 77% in the first six months, then fell 38% by mid-November, and then ended the year up another 23%.
Much of the volatility comes from the enthusiastic following of the industry by K-pop fans and the country’s retail investors. This means news events can easily trigger large price swings, Suh said.
For example, anything from a single group’s contract renewal to rumors of drug use to a star entering into a new relationship for the first time can result in gains or losses for the entire industry. K-pop artists come under intense scrutiny from fans and their agencies. Some reports claim that many singers have “no dating” clauses in their contracts to make them more attractive to fans, while stars such as members of the band Great Guys have spoken out about restrictive diets and forced fitness habits.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
