Amid Bull Market, Top 10 Conglomerates' Market Cap Surges by 350 Trillion Won This Year

Total Market Cap of Top 10 Conglomerates Reaches 2,668 Trillion Won
Up Over 350 Trillion Won From End of Last Year
Samsung and SK Groups Alone Add 200 Trillion Won in Market Cap
Hanwha Group Tops Market Cap Growth Rate After Announcing Spin

With the KOSPI surpassing the 4,700 mark and continuing its record-breaking rally this year, the market capitalization of the top 10 conglomerates has also increased significantly. Since the beginning of the year, their combined market capitalization has grown by 350 trillion won. Companies in the semiconductor, defense, shipbuilding, and automotive sectors, which have been driving the stock market's strength since early this year, have shown particularly notable increases in market capitalization.

According to financial information provider FnGuide on January 15, the combined market capitalization of the top 10 conglomerates as of the previous day stood at 2,668.4235 trillion won, an increase of 350.5396 trillion won compared to the end of last year (2,317.8839 trillion won).

All of the top 10 conglomerates have seen an increase in their market capitalization so far this year. Among them, Hanwha Group recorded the largest increase at 32.25%, followed by Hyundai Motor Group (28.78%), HD Hyundai (15.73%), Samsung (14.50%), SK (13.06%), POSCO (8.11%), Shinsegae (5.65%), LG (3.43%), GS (3.23%), and Lotte (1.13%).

Hanwha Group saw a significant rise in its market capitalization as defense stocks surged since the beginning of the year. Hanwha Systems led the increase among the group’s affiliates, with its share price rising 62.13% since the start of the year. Hanwha Corporation followed with a 57.48% increase, further boosting the group’s overall market capitalization. In particular, Hanwha’s share price soared by more than 25% on the previous day following the announcement of a spin-off. On this day, Hanwha’s board of directors decided to split the company into a surviving entity, which will retain the defense, shipbuilding, marine, energy, and financial businesses, and a new entity that will consolidate the tech and life businesses.

After the spin-off, the tech and life divisions will be placed under the newly established Hanwha Machinery & Services Holdings. This includes tech affiliates such as Hanwha Vision, Hanwha Momentum, Hanwha Semitek, and Hanwha Robotics, as well as life affiliates such as Hanwha Galleria, Hanwha Hotels & Resorts, and Ourhome. The surviving entity will retain affiliates in defense, shipbuilding, marine, energy, and finance, including Hanwha Aerospace, Hanwha Ocean, Hanwha Solutions, and Hanwha Life Insurance.

Following the spin-off announcement, Hanwha Galleria hit its upper price limit, while Hanwha Life Insurance rose by 10.44%, Hanwha Vision by 4.82%, Hanwha General Insurance by 4.21%, and Hanwha Solutions by 1.76%. However, Hanwha Aerospace Systems (-1.01%), Hanwha Engine (-2.95%), and Hanwha Ocean (-5.27%) declined. Park Geonyoung, a researcher at KB Securities, stated, "Hanwha's spin-off aims to eliminate the holding company discount through portfolio optimization and simultaneously enhance both corporate and shareholder value." He added, "Investors are likely to focus more on the potential increase in the valuation of the new company after the spin-off, rather than the surviving company." He further noted, "For Hanwha's share price to rise further in the future, there needs to be a market consensus that the combined market capitalization of the surviving and new companies after the spin-off exceeds that of the pre-spin-off entity."

Hyundai Motor Group, which recorded the second-highest increase in market capitalization after Hanwha, saw eight out of its twelve listed affiliates post double-digit gains, driven by expectations surrounding robotics since the beginning of the year. Among them, Hyundai AutoEver led the group’s market capitalization growth with a 48.34% rise. Lee Jaeil, a researcher at Eugene Investment & Securities, analyzed, "Hyundai AutoEver will be responsible for the operation and maintenance of robots for optimized productivity management when humanoid robots are deployed in smart factories. It will serve as a bridge connecting client companies and the robotics affiliate Boston Dynamics." He added, "Hyundai AutoEver also provides IT infrastructure, operations, and software solutions such as various monitoring and data analytics for smart factories, as well as factory operation optimization models, and is expected to benefit from the group’s increased investment in artificial intelligence (AI)."

Thanks to the strength of the semiconductor sector, the combined market capitalization of Samsung and SK Groups rose from the 1,600 trillion won range at the end of last year to the 1,800 trillion won range. This was driven by the increase in Samsung Electronics’ market capitalization from 709 trillion won at the end of last year to 830 trillion won, and SK Hynix’s rise from 474 trillion won to 540 trillion won.