Advertising Industry Faces First Half Slump Due to COVID-19...Selective Approach Needed

[Asia Economy Reporter Song Hwajeong] The advertising market in the first half of this year is expected to face difficulties due to the novel coronavirus infection (COVID-19), making it unlikely for related stocks to recover easily.

According to NH Investment & Securities on the 15th, both consumer and corporate economic outlooks have worsened due to the COVID-19 situation. The consumer sentiment index in March fell to 78.4, down 18.5 points from the previous month, and the Business Survey Index (BSI) for business conditions also dropped to 93, 13 points lower than the previous month, reaching levels comparable to the financial crisis. Researcher Lee Hwajeong of NH Investment & Securities stated, "Since the survey was conducted amid a rapid deterioration of the domestic and international COVID-19 situation, concerns seem to have been maximized, but recovery to previous levels will take time," adding, "As the recovery of economic-related indices appears difficult, the domestic advertising market will also face challenges."

NH Investment & Securities has downgraded the advertising industry outlook from 'positive' to 'neutral' reflecting the unfavorable external environment caused by COVID-19. Researcher Lee explained, "Due to the globalization of COVID-19, concerns about the economy are likely to prolong beyond the first half, and the advertising market, which is highly sensitive to economic conditions, is expected to contract," adding, "Even when COVID-19 eases in the future, the recovery speed will be relatively slower compared to other industries."

It is suggested that a selective approach is necessary as short-term stock price recovery seems difficult. Researcher Lee said, "Considering the possibility of a prolonged unfavorable external environment caused by COVID-19, a short-term recovery of business conditions and significant stock price recovery appear difficult," and emphasized, "A selective approach focusing on businesses with stable advertisers and strong digital capabilities is required."

This content was produced with the assistance of AI translation services.