[MarketING] Confidence in Earnings, Entertainment Stocks Are Doing Well

Mixed Close Ahead of US Market Holiday
KOSPI Falls Below 2600, KOSDAQ Recovers Above 890

The KOSPI closed lower after three days. This was due to increased caution ahead of the U.S. stock market holiday. The KOSDAQ closed slightly higher, recovering the 890 level. While the overall market showed sluggish movement, entertainment stocks stood out with strong gains driven by confidence in their earnings.

KOSPI falls after three days... KOSDAQ closes slightly higher

On the 4th, the KOSPI closed at 2,593.31, down 9.16 points (0.35%) from the previous day. The KOSDAQ ended the session at 890.00, up 0.71 points (0.08%). The KOSPI started higher but failed to maintain its upward momentum due to cautious sentiment ahead of the U.S. market holiday, closing below the 2,600 mark again. The KOSDAQ turned positive in the afternoon and reclaimed the 890 level.

[Image source=Yonhap News]

Institutions and foreigners sold off, pulling the KOSPI down. On that day, institutions net sold 287 billion KRW in the KOSPI market and 135.8 billion KRW in the KOSDAQ market. Foreigners net sold 59.4 billion KRW and 95.3 billion KRW respectively, and also sold over 1 trillion KRW in the futures market. Individuals were the sole buyers, purchasing 304.5 billion KRW and 235.6 billion KRW respectively.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The domestic stock market showed mixed trends as cautious sentiment prevailed ahead of the U.S. stock market holiday," adding, "The increased selling pressure from foreigners in both spot and futures markets weighed on the index."

Despite the selling trend, foreigners maintained buying interest in Samsung Electronics. On that day, foreigners were the largest net buyers of Samsung Electronics, purchasing 165.2 billion KRW. Samsung Electronics’ stock price closed unchanged at 73,000 KRW but rose intraday to 73,600 KRW, setting a new 52-week high.

Kakao group stocks showed a concurrent decline amid allegations of illegal subsidy payments by Kakao Pay. Kakao Pay fell 4.84%, while Kakao (-2.06%), Kakao Games (-3.32%), and Kakao Bank (-3.06%) also closed lower. The Financial Supervisory Service recently detected suspicions during a surprise inspection that Kakao Pay received illegal subsidies worth several hundred million KRW from NICE Information & Telecommunication, a value-added network (VAN) operator, and referred the case to the police for investigation. It was confirmed during the FSS inspection that NICE Information & Telecommunication, the agency, paid agency fees that Kakao Pay should have paid to offline payment merchant recruitment agents. According to the Specialized Credit Finance Business Act, large credit card merchants like Kakao Pay must not unfairly demand or receive compensation from VAN companies for using credit card value-added communication services, and VAN companies must not provide unfair compensation to large credit card merchants.

Entertainment stocks soar on earnings confidence

While cautious sentiment led to a generally sluggish market, entertainment stocks showed strong gains reflecting expectations for earnings.

On that day, JYP Entertainment rose 4.37%, HYBE 2.33%, SM Entertainment 2.34%, and YG Entertainment 4.40%.

Researcher Kim said, "The KOSDAQ outperformed the KOSPI due to the strength of entertainment stocks," explaining, "Expectations for a second-quarter earnings surprise were reflected, driven by the expansion of fandoms of major artists of large domestic entertainment companies and increased concert revenue."

According to financial information provider FnGuide, JYP Entertainment’s second-quarter earnings consensus forecasts a 108.70% year-on-year increase in revenue to 141.5 billion KRW and an 81.48% rise in operating profit to 44.1 billion KRW. HYBE’s second-quarter revenue is expected to increase 12.16% year-on-year to 574.5 billion KRW, but operating profit is forecast to decline 12.34% to 77.4 billion KRW.

Ji In-hae, a researcher at Shinhan Investment Corp., said about HYBE, "Second-quarter revenue is expected to reach 599.9 billion KRW, significantly exceeding elevated expectations and marking the highest quarterly performance," adding, "Quarterly profits may take a slight pause due to large one-time expenses, but it should be clarified that the profitability deterioration is not due to structural cost increases."

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