Asia Markets

K-pop sex scandals are crushing Korean entertainment stocks

Key Points
  • Two sex scandals that rocked the South Korean music world are crushing the country's entertainment stocks.
  • Reports say five major South Korean entertainment companies lost 17.52 percent in value from Feb. 25 to March 15, after their combined market value fell from 3.35 trillion won ($2.96 billion) to 2.76 trillion won.
Seungri, formerly a member of South Korean boy band Big Bang, is seen arriving at a Seoul police station on March 14, 2019.
Han Myung-Gu | WireImage | Getty Images

Two sex scandals that rocked the South Korean music world have crushed the country's entertainment stocks as police investigate the involvement of celebrities in alleged criminal conduct.

K-pop artist Seungri (real name Lee Seung-hyun), who was part of hugely popular boy band Big Bang, has been accused of providing prostitutes to investors in a club he owned. Police are also seeking a warrant to arrest another star, TV personality Jung Joon-young, over sex videos that he allegedly shared in social media chat rooms.

YG Entertainment, the company that manages Big Bang and Seungri, has seen its stock plummet 24.8 percent since Feb. 25, after the celebrity was questioned by police over drug use and prostitution. On Tuesday, the stock closed at 36,150 Korean won per share, down around 1 percent from the day before.

According to reports, the nation's five major entertainment companies lost 17.52 percent in value from Feb. 25 to March 15, after their combined market value fell from 3.35 trillion won ($2.96 billion) to 2.76 trillion won.

Trouble first surfaced in late January, when Korean media reported that employees at Burning Sun, a nightclub then owned by Seungri, were being accused of assaulting a customer. Things spiraled in late February, when the singer was taken in for questioning by the police.

On March 11, following reports that the celebrity had been charged with providing sexual services at his club, YG Entertainment saw its stock fall 14.1 percent. On the same day, Seungri announced on his Instagram account that he would retire from show business.

The stock fell another 3.4 percent on March 12.

Other Korean entertainment companies such as JYP Entertainment, SM Entertainment, Cube Entertainment and FNC Entertainment also suffered losses as the scandals unfolded.

Seungri and several other artists were reported to be members of the mobile chat room where Jung sent videos of himself having sex with women. Jung and Choi Jong-hoon, a member of band FT Island who was also alleged to have been in the chat group, announced they would retire.

FNC Entertainment, which manages Choi, saw its share price fall 11.1 percent on March 11.

SM Entertainment, Cube Entertainment and FNC Entertainment all saw their stocks recording more than 20 percent declines from Feb. 25 to March 15. JYP Entertainment, meanwhile, was only down about 5.5 percent during that period.