Psy, whose real name is Park Jae Sang, is the first Korean pop star to top Apple’s (AAPL) music download charts. The YouTube video has had more than 270 million views so far; a recent appearance on Saturday Night Live seemed to cement Psy’s role as a cultural phenomenon.
And some investors are banking on this phenomenon having a positive influence on his father’s company. Psy’s father, Park Won Ho, is chairman and CEO of D I Corp and holds a 10% stake, according to a news report by Korea’s MK Business News. Psy’s uncle, Park Won Deok, is vice chairman of the company’s board and owns 15.8% of the shares. South Korea’s market regulations actually prohibit a company’s stock from rising or dropping more than 15% in a day. Yet D I Corp. has hit the limit-up consecutively in the past three days.
Korean Regulators disagree with the notion of Psy affecting D I’s stock. There are rumors that some people may have colluded to drive up the stock price in order to gain a profit. The Korean Financial Investment Association has indicated there is no link between the D I and Psy and that an official warning for investors may soon be released, according to news reports. The company has also not reported any major new developments or product releases in the past couple of months that would warrant the doubling of the stock price. So the Association sees the surge as being unusual and is advising investors to be cautious because shares could drop as quickly as they rose.
Portfolio Manager of Victory Capital Management Eun S. Cho says he can’t pinpoint a specific cause for the stock’s gain. “This is an atypical situation,” he says. “It perhaps could have been influenced by Psy’s popularity.” But he noted that, “regarding the company, they were loss-making, so most institutional investors see that as a red flag. It’s not a stock that’s been covered and followed regularly.”
Regardless of whether Psy has had a direct influence or not, some investors are riding the wave and betting on both D I Corp and YG Entertainment, the company that represents the singer. YG’s (122870.KQ) stock price has nearly doubled as well in the past couple months; this is a much more reasonable correlation, as Psy actually works with the company. For example, Psy is expected to generate sales of at least 11 billion won or almost $10 million, according to Korean entertainment site ENewsWorld. The singer also recently signed with music executive Scooter Braun, who represents Justin Beiber, and he is expected to release a new album in November.