[High Kick Han Stock Market] 4th Industrial Revolution Stocks Rising as Market Leaders

Top Market Cap Previously Dominated by Traditional Manufacturing
Replaced by Untact and Bio Stocks like Naver, Kakao, and Celltrion

[Asia Economy Reporter Park Jihwan] The market capitalization landscape of the domestic stock market has significantly changed before and after the spread of the novel coronavirus infection (COVID-19). Traditional heavy and chemical industry stocks that previously led the domestic economy have been largely pushed out of the top ranks, replaced by Fourth Industrial Revolution stocks such as untact (contactless) and bio sectors.

According to the Korea Exchange on the 19th, looking at the market capitalization rankings of the domestic stock market as of January 2, the beginning of this year, the order was Samsung Electronics, SK Hynix, Naver, Samsung Biologics, Hyundai Motor, Hyundai Mobis, Celltrion, LG Chem, POSCO, and Samsung C&T. Traditional export-oriented manufacturing stocks were prominently positioned among the top market capitalization stocks.

As of the 18th of this month, nearly six months later, the market capitalization rankings changed to Samsung Electronics, SK Hynix, Samsung Biologics, Naver, Celltrion, LG Chem, Samsung SDI, Kakao, Samsung C&T, and SK. The top market capitalization rankings were filled mostly with stocks related to the semiconductor, bio, untact, and battery (secondary battery) sectors of the Fourth Industrial Revolution.

The most notable change appeared in untact-related stocks. Online platform companies such as Naver (4th) and Kakao (8th) overturned the domestic stock market landscape by surpassing Hyundai Motor, which was ranked 5th in market capitalization. Kakao, which was only ranked 23rd at the end of last year, entered the top 10 in market capitalization for the first time on the 13th of last month and has since rapidly expanded its size.

Semiconductor sectors, led by Samsung Electronics (1st) and SK Hynix (2nd), continue to attract steady market interest due to increased demand for smartphones and autonomous vehicles.

However, investors seem to be losing interest in heavy and chemical industries such as automobiles, aviation, shipbuilding, and steel. POSCO, a leading domestic steel company ranked 9th in market capitalization at the beginning of the year, has fallen to 16th. Hyundai Motor and Hyundai Mobis, which were ranked 5th and 6th respectively at the start of the year, dropped to 11th and 14th. Hyundai Motor was competing for the 1st and 2nd spots in market capitalization with Samsung Electronics as recently as 2015.

Pharmaceutical and bio companies such as Samsung Biologics (3rd) and Celltrion (5th) have all risen in market capitalization rankings compared to the beginning of the year. These stocks are interpreted as reflecting expectations for COVID-19 vaccine development. Secondary battery stocks like LG Chem and Samsung SDI have also seen their stock prices rise amid forecasts of increased demand as the global automobile market is reorganized around electric vehicles led by Tesla.

In the KOSDAQ market, pharmaceutical and bio stocks continue to perform well. Alteogen, which possesses subcutaneous injection conversion technology, was outside the top 30 in market capitalization at the end of last year but recently rose to 4th place. Seegene, ranked 5th, was 43rd at the end of last year but rapidly increased its market capitalization due to attention from COVID-19 diagnostic kits. Celltrion Healthcare’s market capitalization, which was about 7.57 trillion won at the beginning of the year, increased by approximately 8.39 trillion won to 15.96 trillion won as of the day before. Celltrion Pharm, which declared its ambition to become a comprehensive pharmaceutical company, jumped 18 places from 20th to 2nd.

On the other hand, CJ ENM fell from 3rd to 8th, and Paradise dropped sharply from 9th to 24th. CJ ENM’s TV advertising revenue and movie theater sales decreased due to the impact of COVID-19, while Paradise suffered a blow to its foreigner casino sales as air routes were cut off until recently.