South Korean Stocks Surge – But Casino Operators Are Being Left Behind

South Korean stocks are booming, but share prices of casino operators listed on the Korea Exchange are bucking the trend, falling into a slump.

The Korea Composite Stock Price Index (KOSPI), which tracks all common stocks traded on the exchange, has soared by almost 20% over the past month. On January 16, the index broke past the 4,800 point mark for the first time in its history, the South Korean newspaper Chosun Ilbo reported.

But while big tech firms and semiconductor makers like Samsung Electronics and SK Hynix have seen massive gains, casino operator prices have slumped.

As blue-chip stocks soared at the end of trading on January 16, prices in the Paradise City casino-resort operator Paradise dropped by almost 2%.

South Korean Stocks: Gambling Operators Missing Out

A similar drop was also seen at Grand Korea Leisure (GLK), the operator of the Seven Luck casino franchise. GLK’s prices have slumped by over 8% in the past month, falling by over 21% in the past six months.

Another firm experiencing similar drops was Kangwon Land, operator of the High1 casino-resort in Gangwon Province. The operator’s prices fell by over a percentage point on January 16, and by almost 12% over the past six months.

The story was the same at Lotte Tour Development, which runs the Jeju Dream Tower Integrated Resort, home to South Korea’s largest foreigner-only casino. The firm saw its prices drop by almost 1% on January 16, and by just under 8% since the start of the year.

Global Slump & Domestic Worries

Korea Economic Daily analysts said that rapid earnings upgrades at the country’s semiconductor, shipbuilding, defense, and energy giants could see prices rise even higher, following an “11-day winning streak that has already pushed the South Korean benchmark index to record highs.”

But there has been no such joy at South Korean casino operators. The slump appears to reflect global trends. Gambling operators are seeing share prices fall in the USA amid a sell-off.

However, domestic issues may also be playing a role in the situation. There are indications that fewer people appear to be gambling through legal channels, with overseas casinos reporting a drop in South Korean foot traffic.

South Korean tourist arrivals in destinations like Manila are “anemic,” say experts, with a year-to-date decline of 20%. Such figures “continue to weigh on the VIP volumes of all integrated resorts,” the experts said.

President’s Comments

The domestic casino sector suffered another blow when South Korean President Lee Jae-myung called foreign-passport-holder-only casinos “gambling dens.”

Lee, who has hit out at gambling operators previously in his tenure, also questioned the appropriateness of “granting operating licenses to the private sector.”

He urged the country’s culture and sports ministry to “bear this in mind when making policy decisions in the future.”

All casinos in South Korea, except High1, are banned from admitting domestic passport holders.

But Lee has also taken aim at High1 and its operator Kangwon Land. In response to a request from Kangwon Land’s interim CEO to ease gambling caps at High1, Lee launched an attack on betting.

“I believe there are several terminal factors that could lead to the downfall of [South Korea],” he said. “I think these terminal factors include the menace of loan sharks and gambling.”