In the first half of this year, entertainment stocks drew strong investor interest as a “tariff-free zone,” standing out amid broader trade policy concerns. (Image courtesy of Yonhap)
SEOUL, June 7 (Korea Bizwire) — South Korea’s entertainment stocks are rallying on renewed hopes of a diplomatic thaw with China, as investors bet on policy tailwinds under President Lee Jae-myung’s new administration.
According to data released by the Korea Exchange, shares of the nation’s four major entertainment companies have surged an average of 56.7% this year as of June 5, with expectations mounting that improved Korea-China relations could unlock a wave of pent-up demand for Korean cultural exports.
YG Entertainment [KOSDAQ: 122870] led the pack with a 90.8% rise, climbing from 45,800 won to 87,400 won. SM Entertainment [KOSDAQ: 041510] followed with a 77.8% gain, while JYP Entertainment [KOSDAQ: 035900] rose 11.2%. HYBE [KOSPI: 352820], the only KOSPI-listed company among the group, gained 47.1%.
Earlier in 2025, entertainment stocks attracted investor attention for their insulation from geopolitical tariff risk, particularly as the Trump administration in the U.S. pursued aggressive trade policies. KOSDAQ-listed entertainment stocks outperformed the broader market throughout the first half of the year, with monthly gains in January (8.9%), February (19.7%), April (13.0%), and May (10.7%).
The photo shows the exterior view of YG Entertainment’s headquarters. (Image provided by YG Entertainment)
While momentum cooled slightly in recent weeks as tariff fears subsided, market analysts remain bullish. Financial data provider Yonhap Infomax reported that average target prices for entertainment stocks have been raised in recent weeks: SM’s rose 18.7% to 155,867 won, YG’s rose 12.7% to 91,000 won, and HYBE’s ticked up 4.3% to 331,250 won. JYP’s price target was also revised upward by Heungkuk Securities, from 85,000 won to 100,000 won.
The policy pivot under the Lee administration is seen as a key catalyst for the sector, especially with speculation rising over a possible rollback of China’s informal “Korean Wave ban” (Hallyu-restriction order) imposed since 2016.
Hwang Ji-won, senior researcher at iM Securities, noted that diplomatic overtures at the upcoming APEC summit in October could accelerate the normalization of cultural exchanges.
This file photo shows an exterior view of the main building of Hybe, the South Korean entertainment giant behind K-pop supergroup BTS, in Seoul. (Image courtesy of Yonhap)
“There’s already substantial unofficial demand for Korean content in China. If coupled with policy normalization, we could see a sharp rebound in revenues from large-scale tours, fan meetings, and advertising,” she said.
China’s decision in late 2024 to allow visa-free entry for South Korean passport holders signaled early signs of rapprochement. With the new administration’s foreign policy likely to depart from its predecessor’s more cautious stance, expectations are building for deeper engagement.
“The Lee government may adopt a more proactive diplomatic posture toward China,” said Lee Kyung-min, a strategist at Daishin Securities. “This aligns well with China’s own efforts to stimulate domestic demand, which could benefit Korea’s media and entertainment sectors.”
As diplomatic signals turn more favorable and investor sentiment heats up, analysts expect the entertainment sector to remain a high-profile beneficiary of South Korea’s evolving policy and trade dynamics.
M. H. Lee (mhlee@koreabizwire.com)
