COVID-19 Beneficiary Stocks Surge, Major Shift in Top Market Capitalization Rankings

Celltrion and LG Saenggeon Rise to 5th and 7th... Hyundai Mobis Falls Out of Top 10 Amid Industry Slowdown Concerns

[Asia Economy Reporter Song Hwajeong] The spread of the novel coronavirus infection (COVID-19) has brought changes even to the top market capitalization stocks. Stocks expected to suffer from sluggish business conditions due to COVID-19 saw their market cap rankings fall, while those expected to benefit from COVID-19 rose in rank.

According to the Korea Exchange on the 25th, compared to the end of last month, the rankings of Hyundai Motor and Hyundai Mobis among the top 10 stocks by market capitalization on the KOSPI market noticeably dropped, while Celltrion and LG Household & Health Care made significant advances.

As concerns over weak demand due to COVID-19 expanded, automobile stocks' prices fell sharply, leading to a significant decrease in market capitalization. Hyundai Motor, which was ranked 6th at the end of last month, dropped to 9th, and Hyundai Mobis, previously 9th, fell out of the top 10. Hyundai Motor's stock price fell nearly 35% up to the day before this month, with about 8.6 trillion KRW wiped out from its market cap during the same period. Hyundai Mobis's stock price dropped 31%, and its market cap decreased by 5.7 trillion KRW.

Researcher Cho Suhong of NH Investment & Securities said, "Due to the impact of COVID-19 on production and consumption shocks, the sharp drop in international oil prices, and the weakening of emerging market currencies, global automobile demand uncertainty has expanded," adding, "Accordingly, Hyundai Motor Group's global sales this year are expected to decrease by 2.0% from the previous year to 6.97 million units, marking the lowest level since 2012."

On the other hand, Celltrion, whose stock price recently surged significantly on news of COVID-19 treatment development, rose two ranks to 5th compared to the end of last month. Celltrion's stock price increased by 8.24% this month, and its market cap grew by about 1.8 trillion KRW. LG Household & Health Care also climbed from 11th to 7th place. Although LG Household & Health Care's stock price fell 6.31% this month, reducing its market cap by 1.2026 trillion KRW, the larger declines in the stock prices of higher-ranked companies led to its rise in ranking. The rise of NCSoft is also notable. NCSoft, ranked 18th at the end of last month, rose to 11th as of the previous day's closing price, nearing entry into the top 10.

There were also changes in market capitalization rankings on the KOSDAQ. CJ ENM, hit directly by COVID-19, fell from 3rd to 6th place, while Celltrion Pharm jumped eight ranks from 15th to 7th. Studio Dragon rose from 5th to 3rd, securing its position as the leading content stock.

CJ ENM's stock price fell 27.6% this month as the film industry was directly hit by COVID-19, and activities such as concerts were blocked, leading to expected sluggishness in the music sector as well. DB Financial Investment forecasts CJ ENM's first-quarter earnings to show sales of 830.2 billion KRW, down 3.5% year-on-year, and operating profit of 54.9 billion KRW, down 30.6%, missing consensus estimates. Shin Eunjeong, a researcher at DB Financial Investment, said, "Despite overseas screenings of Baekdusan and Parasite in January, the film sector is expected to suffer a loss of about 2 billion KRW due to the direct hit from COVID-19, and the music sector is also expected to incur operating losses as concerts and other activities are impossible," adding, "Due to the sluggishness in media, film, and music sectors in the first half of the year, we have lowered the full-year operating profit forecast by 14.4% from the previous estimate."

Studio Dragon, on the other hand, is analyzed to have an improved business environment due to COVID-19. Park Jeongyeop, a researcher at Mirae Asset Daewoo, said, "The expansion of content sales to global clients, which was expected over the long term, is expected to accelerate through the epidemic situation," adding, "The business environment is expected to improve rather after COVID-19."