Why Are Kakao and Naver Stocks Declining After Rising Due to the New Government Effect?

[Asia Economy Reporter Kwon Jae-hee] Naver (NAVER) and Kakao, whose stock prices had risen on expectations of deregulation of platforms by the new government, have recently been struggling. This is due to the momentum of growth stocks being adjusted following the US interest rate hikes, as well as the anticipation of weak first-quarter earnings. Nevertheless, individual investors are viewing this as a 'buying opportunity at a low price' and are purchasing shares.

According to the Korea Exchange on the 12th, Naver's stock price closed at 330,000 KRW on the 6th, down 3.65% from the previous trading day. It then closed down 2.73% on the 7th and 1.4% on the 8th. As of 9:30 AM on the 12th, it was trading at 308,500 KRW, down 1.44% from the previous trading day.

Kakao also closed lower for four consecutive trading days starting from the 6th. Kakao closed at 105,000 KRW on the 6th, down 2.33% from the previous day, and closed at 99,900 KRW on the 7th, down 4.86%. It closed at 98,000 KRW on the 8th, down 1.9%, and at 95,100 KRW on the 11th, down 2.96%.

Naver and Kakao are considered representative stocks that surged sharply after the presidential election on expectations of platform deregulation. On March 10, immediately after the presidential election, Naver rose 8.54% to 330,500 KRW, and Kakao increased 8.58% to 100,000 KRW.

This sluggish stock price trend is interpreted as the effect of a reduction in valuation premiums for growth stocks due to US interest rate hikes. Additionally, the weak first-quarter earnings outlook appears to have influenced this. Accordingly, Samsung Securities lowered Kakao's target price from 150,000 KRW to 140,000 KRW.

Nevertheless, individual investors' buying momentum continues. According to the Korea Exchange, from January 3, the first trading day of this year, to April 8, Naver ranked second in net purchases by individuals (1.3201 trillion KRW), and Kakao ranked third (1.0207 trillion KRW).

Jung Ho-yoon, a researcher at Korea Investment & Securities, said, "Kakao's stock price has been sufficiently adjusted," and interpreted that "if platform regulations are eased, it will be the first to benefit."

Kim Dong-woo, a researcher at Kyobo Securities, analyzed, "Despite the slowdown in the domestic commerce market, Naver has sufficient factors exceeding growth, such as expanding market dominance, brand stores, and grocery shopping," and added, "Profitability is expected to improve gradually."

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