YG’s Share Price Soared by 30% with Blackpink’s Contract Renewal: How can Singapore Investors Ride the K-Pop Phenomenon?

December 7, 2023

The K-pop universe is abuzz with excitement as Blackpink, one of the genre’s most iconic groups, renews their contract with YG Entertainment Inc (KOSDAQ: 122870), setting the stage for more mesmerising performances and chart-topping hits.

This event not only cements Blackpink’s status as a global K-pop sensation but also opens up intriguing investment opportunities, particularly for Singaporean investors keen on tapping into the Hallyu wave.

Impact of Blackpink’s Renewal on YG Entertainment

This news, eagerly anticipated amid months of speculation about the group’s future, has had a remarkable effect on YG Entertainment’s shares, propelling them up by nearly a third.

Blackpink’s decision to stick with YG Entertainment has quelled uncertainties and propelled the company’s financial prospects.

YG Entertainment’s stock rose as much as 29% to KRW 61,900 (S$63.20), hitting a more than three-week high following the announcement. This surge was echoed across the industry, with other major South Korean entertainment labels experiencing notable gains: HYBE Co Ltd (KSE: 352820), the powerhouse behind BTS, saw a 7.3% rise; JYP Entertainment Corp (KOSDAQ: 035900) increased by 5.7%; and SM Entertainment Co Ltd (KOSDAQ: 041510)’s shares went up by 5.2% in morning trade.

How can Singapore investors invest in Kpop stocks?

For fans and investors in Singapore, where direct investment in Korean stocks is not straightforward, this development presents a unique opportunity to engage financially with the K-pop industry.

One viable option is investing in the KPOP and Korean Entertainment ETF (NYSE Arca: KPOP), which is listed on the New York Stock Exchange. This approach offers exposure to a range of entertainment stocks, encapsulating the broader growth and dynamism of the South Korean entertainment industry.

Investing in a K-pop ETF is more than just a financial venture; it is an avenue for fans to align their investment strategies with their passions.

Here are some of the benefits of investing in K-pop ETF:

  1. Diversification within the entertainment sector

This diversified investment allows for a more stable engagement with the industry’s financial aspects, reducing reliance on the performance of individual companies and mitigating risks associated with market volatility.

  1. Exposure to a growing industry

Exposure to a Growing Industry: The K-pop industry has seen remarkable growth over the past decade, gaining international acclaim and significantly contributing to South Korea’s cultural exports. Investing in a K-pop ETF allows investors to tap into this expanding market.

  1. Cultural influence and brand power

Groups like BTS and Blackpink have achieved global brand recognition, which can translate into significant economic value. This brand power often leads to partnerships and collaborations that can further drive growth in the industry. The rising popularity of K-pop globally, especially among younger demographics, aligns well with current consumer trends in entertainment and media consumption, potentially offering stable growth prospects.

  1. Currency exposure risk mitigated

Investing in a K-pop ETF traded in USD offers a significant advantage in terms of mitigating currency risk.

This approach is particularly beneficial for Singapore investors, as it reduces their exposure to the fluctuations and uncertainties associated with the Korean Won (KRW).

By investing in a dollar-denominated ETF, investors can enjoy the growth potential of the K-pop industry while avoiding the complexities and potential risks of dealing with foreign currency exchange, which can be a significant factor in international investing.

  1. Significance to the South Korea’s Economy

K-pop is a significant part of South Korea’s services industry and cultural exports, often referred to as the Hallyu wave. By investing in a K-pop ETF, investors indirectly contribute to and benefit from the growth of this critical economic sector.

Risk Considerations

Despite the potential of investing in K-pop ETF, here are some of the downside risks that investors should be cautious of. As with any investment, there are risks involved, particularly in an industry as dynamic and trend-driven as entertainment.

Potential investors should be aware of market fluctuations influenced by changing consumer preferences and global trends. It is advisable to seek advice from financial experts and thoroughly research before making investment decisions.

Strategic investment into the world of pop culture and finance

The recent surge in YG Entertainment’s stock following Blackpink’s contract renewal highlights the intersecting worlds of pop culture and finance. For Singaporean investors, the Korean Entertainment and K-pop ETF provides a strategic pathway to participate in the financial aspects of the K-pop phenomenon.

We have also seen how the success of K-pop acts like BTS and Blackpink has also spurred growth in related industries, such as fashion, cosmetics, and technology, showcasing the broad economic impact of this cultural phenomenon.

As Blackpink and other K-pop groups continue to captivate audiences worldwide, their fans in Singapore now have the chance to be part of this cultural and financial journey, not just as spectators but as investors in the ever-evolving realm of K-pop.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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