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K-pop stocks Hybe, SM Entertainment fall on reports of antitrust probe

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  • Shares of SM Entertainment and Hybe fell in early trade following reports of an investigation by the Korea Fair Trade Commission.
  • While SM Entertainment and Hybe were in the red, YG Entertainment was in the red, gaining more than 2%.

INDIO, CA – APRIL 15: (LR) Jisoo, Lisa, Jennie and Rosé of BLACKPINK at the Coachella Valley Music and Arts Festival 2023 on April 15, 2023 in Indio, CA Performing on stage at Coachella.

Frazer Harrison | Getty Images Entertainment | Getty Images

Shares in K-pop agencies briefly fell on Wednesday after South Korea’s antitrust regulator reportedly launched an investigation.

The South Korean Fair Trade Commission has launched an investigation into allegations of abuse of power by a major entertainment agency, local media Yonhap News Agency reported on Wednesday, citing unnamed industry sources.

According to a CNBC translation of the article, the report said the government agency sent “censors” to the offices of Hybe, SM Entertainment and YG Entertainment.

The companies allegedly violated the country’s “subcontracting law,” including using verbal contracts instead of written documents and delaying payments when producing albums and merchandise, Yonhap reported.

Shares of Hybe, the agency behind BTS, fell as much as 3 percent, while SM Entertainment fell as low as 2.19 percent. Both stocks pared some of their losses by Wednesday’s lunch break.

YG Entertainment, the management company of girl group Blackpink, fell less 1.49 percent, but then reversed course to rise 2.23 percent.

Speaking to CNBC, South Korea’s FTC said it could not confirm or deny Yonhap’s report. YG Entertainment, SM Entertainment and Hybe also did not respond to requests for comment on the Yonhap report.

— CNBC’s Kimberly Kao contributed to this report.

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