What does BTS think of our ships

Rhythm on the trading floor

The initial share issue of a K-Pop band is oversubscribed 1,000 times. Such «people's shares» tend to be a burden for stock exchanges in the long term.

Why don't Lo & Leduc go public? The successful dialect pop duo from Bern could inspire a new layer of investors to save shares. The Swiss stock exchange would have needed it: Trading volumes are declining, and there has not yet been an IPO (initial share issue) this year.

South Korea this week showed how pop music can make stock trading dance again. The IPO of the K-Pop group BTS was oversubscribed 1000 times. The shares of Big Hit Entertainment, which is the music label of the seven singing South Korean youths, made their market debut for 135,000 won, which corresponds to around 110 Swiss francs. This is the upper end of the price range from the bookbuilding process. The company is valued at over CHF 4 billion. The creator of the band is now sitting on a share of CHF 1.4 billion. Each of the seven singers holds shares for CHF 8 million each.

The sound of the hour

You might find that pretty much for the trademark and music rights of languishing teenagers. But just ask the young team - K-Pop is the thing of the hour. Hardly anyone outside of Korea understands the text. But music, dance steps and outfit meet the zeitgeist. BTS and other bands have stormed the charts and clubs around the world in recent years.

Market participants in Seoul welcome the music stocks as a welcome fountain of youth. The local stock exchange is facing similar problems as the Swiss counterpart. The main index is dominated by established corporations that manufacture ships, semiconductors and flat screens. It's solid, but not sexy. That may be attractive for pension funds, but not for young investors. Like the Swiss stock market, the trading center in South Korea has remained slumbering so far this year with regard to new share issues - while business in other markets such as the USA is booming and attracting new investors.

How long does the trend last?

But the much-vaunted rejuvenation of the market and the revival of stock saving could prove to be a boomerang in South Korea. Because hardly anything is more fast-moving than the trends in pop music. Perhaps the K-pop phenomenon is disappearing from the international charts as soon as the teenage groups with the colored hair have emerged. Scandals, such as sexual abuse by another K-pop group, can quickly destroy the protagonists' proper son-in-law image. A stock like Big Hit Entertainment, which only "represents" a boy group, appears to be quite susceptible to price setbacks.

What a people's share that doesn't work can do has been shown in Germany with Deutsche Telekom. The advertising campaign, which explicitly advertised the title as a «people's share», was a complete success. Many German savers, who had previously avoided stocks, turned to the former state-owned company. However, the acquisition of overpriced UMTS licenses and a risky US strategy caused the share price to collapse. This is still below the issue price of 1996. In doing so, Telekom did a disservice to stock savings in Germany.