K-content Lags Despite Market Rebound, but Brokerages Expect Second-Half Momentum

[Financial News] While the KOSPI Composite Index has been rebounding, the content sector has moved in the opposite direction, declining and diverging from the broader market.
As the K-Content Index, which covers platforms, entertainment and gaming, continues to be the only one lagging, investors are debating whether this reflects a broad derating of growth stocks or an entry into an excessively undervalued zone.
According to the Korea Exchange (KRX) on the 15th, from March 13 to April 14 the KOSPI Composite Index rose 6.89%, whereas the K-Content Index fell 7.38%.
During this period, even as the overall index turned upward, the content sector deepened its losses and posted the weakest performance among major thematic indices.
Individual stock moves also confirm broad-based weakness across the sector.
In entertainment, Hybe dropped about 32.1%, while JYP Entertainment and SM Entertainment both recorded double-digit declines.
In platforms, Kakao fell about 4.9% and Naver slid 9.6%, and in gaming, Krafton and Netmarble declined 2.2% and 7.5%, respectively, underscoring a generally weak trend.
Brokerages view the recent slump in entertainment stocks as an excessive derating relative to fundamentals. They note that despite stronger earnings momentum driven by continued activity from major artists such as BTS and Blackpink, share prices have fallen to near historical lows, sharply compressing valuation multiples. In particular, given the simultaneous growth of third- to fifth-generation artists and the potential for further expansion into Western markets, analysts argue that mid- to long-term growth prospects remain intact, and that the current share-price trend represents an oversold phase where the gap with underlying earnings has widened. Lee Hwa-jung, an analyst at NH Investment & Securities, said, "The first quarter is usually considered a low season for the entertainment industry, but this quarter is different, with new album releases and multiple concerts," adding, "We expect both per-album sales volumes and ancillary revenue to exceed typical off-season levels." In the platform sector, earnings are improving on the back of advertising and commerce, yet share prices remain sluggish as expanded AI investment and rising promotion costs weigh on profitability. Analysts say that uncertainty over when AI businesses will be monetized is adding to valuation pressure. Kang Seok-oh, an analyst at Shinhan Securities, noted, "In Naver's case, expectations related to AI and virtual assets have faded and the likelihood of an earnings surprise has diminished, leading to a share-price decline," and added, "For Kakao, the timeline for commercializing and monetizing its AI business is being pushed back." The gaming sector is also seen as lacking catalysts to lift the group as a whole, as performance from new titles has been limited except for a few hit games based on existing intellectual property.


koreanbae@fnnews.com Bae Han-geul Reporter