Beneficiaries of Family Month... Only Game Stocks Are Smiling

Toy Companies Sonokong and Aurora
Stock Prices Fall Compared to Late Last Month Despite Children's Day Events

Game Stocks Com2uS and HanbitSoft
Rise Alone Due to 'Stay-at-Home' Effect

[Asia Economy Reporter Park Jihwan] In May, known as the month of family, stocks related to toys, travel, distribution, and dining sectors are experiencing mixed fortunes. Most industries are unable to avoid stock price declines, let alone benefit from the family month. In contrast, only game stocks are showing a concentrated upward trend.

According to the Korea Exchange on the 8th, toy company Sonokong closed at 1,895 KRW yesterday, down 9.11% from 2,085 KRW at the end of last month. Aurora also fell 6.42% from 10,900 KRW to 10,200 KRW during the same period. It is no exaggeration to say that toy sales during the Children's Day season determine the annual performance. For some companies, second-quarter sales, which include Children's Day, account for more than one-third of annual sales.

The reason toy companies focus various discount events in May is due to this. Sonokong is recently conducting special toy sales events both online and offline. On Auction, they plan to offer discounts on essential childcare products, including the Fisher-Price national toy series, for one day on the 17th. Large marts such as E-Mart, Homeplus, and Toys "R" Us are also holding events offering up to 50% discounts on flagship products. Aurora World has signed an official license agreement with the Korean Educational Broadcasting System (EBS) and will release various products featuring the Pengsoo character starting this month. Although toy companies regard May as the biggest season of the year and are attracting customers with various events, stock prices are not responding accordingly.

The situation is similar for distribution and dining stocks. Shinsegae fell 2.08% from 265,000 KRW at the end of last month to 259,500 KRW yesterday. Hyundai Department Store dropped 2.48% from 72,700 KRW to 70,900 KRW. GS Home Shopping (-4.15%) and Lotte Shopping (-4.91%) also declined together. This is contrary to the increase in family dining and shopping as social distancing measures due to COVID-19 have eased.

Leading travel stocks such as Modetour (-2.30%) and Hanatour (-2.24%) are also struggling. The travel industry, hit hard by the spread of COVID-19, had expectations that travel demand would significantly increase this month due to the government's transition to daily quarantine measures, but stock prices have yet to recover.

The most noticeable are game stocks. In addition to the traditional boom period, they have benefited from the COVID-19 halo effect symbolized by staying at home. Game company Com2uS rose 3.08% from 107,000 KRW at the end of last month to 110,300 KRW yesterday. During the same period, HanbitSoft surged 11.95% from 2,635 KRW to 2,950 KRW. NCSoft also saw a slight increase from 643,000 KRW to 646,000 KRW.

The severe decline in stock prices of family month-related stocks, except for game stocks, is because most of these industries are related to domestic consumption. According to the Bank of Korea's consumer sentiment survey in April this year, as the economic recession due to COVID-19 intensified, the Consumer Confidence Index (CCSI) recorded its lowest level in 12 years last month. The April CCSI fell 7.6 points from the previous month to 70.8. This is the lowest figure since December 2008 (67.7), when the financial crisis peaked.

A financial investment industry official explained, "Most family month-related stocks tend to be sensitive to the domestic economy," adding, "It seems that the negative impact of COVID-19 on economic activities has not yet completely disappeared."