Entertainment stocks in South Korea, long trapped under China‘s alleged ban on Korean artists performing in the country, rallied on anticipation of an easing of the Korea-China relationship after a renewed won-yuan currency swap deal last week.

Shares of firms devoted to the Korean popular culture industry, ranging from K-pop music to TV series and films, have largely contributed to gains of the second-tier Kosdaq index Tuesday by 1.68 percent. Many entertainment stocks in Korea are listed on the Kosdaq, except for a few Kospi-listed players such as IHQ.

TV production companies Chorokbaem and Huayi Brothers Korea took the largest gains in the sector. Chorokbaem jumped 12.1 percent, while Huayi Brothers Korea soared 10.2 percent. From Monday, they rose 16.7 percent and 17.8 percent respectively.

Most of the talent management agencies also picked up. K-pop powerhouses S.M. Entertainment and JYP Entertainment gained 2.5 percent and 1.9 percent, respectively. Other key players such as Cube Entertainment, FNC Entertainment and Keyeast surged 6.5 percent, 5.2 percent and 3.1 percent. The largest media company in Kosdaq CJ E&M also rose 2.4 percent.

Exceptions in the sector were K-pop giant YG Entertainment, which remained flat, and record label Loen Entertainment, which dropped 2.1 percent.
 For the past three months until Sept. 26, when many entertainment stocks hit their lowest in three months, large entertainment stocks have suffered a downward spiral. IHQ plummeted 28 percent, JYP Entertainment spiraled 22 percent, S.M Entertainment plunged 21.2 percent and YG Entertainment fell 18.2 percent over the cited period.

The entertainment industry, along with many other consumer goods sectors that has suffered from Beijing’s purported economic retaliation against Seoul’s decision to deploy anti-missile systems since the first quarter this year, would pick up the pieces late this year and possibly benefit from base effects in the first quarter of 2018, analysts noted.

“Worst days have already passed by,” Kim Seung-hyun, chief strategist at Yuanta Securities, told The Korea Herald Tuesday. “The currency swap deal (between Korea and China) made a turnaround in investors’ sentiment.”

He added that, aside from changes in sentiment, the economic indicators have been improving, citing a gradual increase in the number of Chinese tourists in Korea, from 240,000 in April to 360,000 in August.

By Son Ji-hyoung 
(consnow@heraldcorp.com)