South Korea's economy is in a slowdown phase with growth hitting a quarterly low, its currency under pressure and political turmoil. Donald Trump's executive order on tariffs has also made it difficult for the Hallyu nation to keep going.
However, there is one industry that has given investors hope: South Korea's biggest cultural export, K-pop.
The four major K-pop companies have gained between 20% and 33% so far this year, outperforming the Kospi. Hybe, JYP and YG have also hit new 52-week highs this year.
Hybe, which owns the popular group Bangtan Boys (BTS), is the largest K-pop agency by market cap on the high-end Kospi index. Meanwhile, SM Entertainment, JYP Entertainment and YG Entertainment are included in the small-cap Kosdaq.
The rise marks a recovery in the companies' stock performance from 2024, when they suffered a dismal drop in album sales.
Shinhan Securities analyst Ji In-Hae said one reason K-pop stocks are receiving renewed investor interest is that the sector is not exposed to the risk of US tariffs.
Tariffs have been a major source of uncertainty for South Korea with Trump's threat of retaliatory tariffs escalating.
The confidence in K-pop stocks is also linked to the potential stimulus the industry will receive this year.
South Korea's media and entertainment sector is seeing factors such as the industry's expected strong performance in 2025 as popular artists return and profits rise from a low base last year.
In addition, the Korea Economic Daily reported last month that China is likely to lift its ban on events promoting Hallyu, or Korean popular culture, in the country as early as May.
