Combined Market Value of All Korean Stocks Is Now Less Than Amazon or Apple

(Bloomberg) -- South Korea, central to the global supply chain for technology and electronics, is failing to keep pace with some of its largest customers. The result is that the market value of Apple Inc., Microsoft Corp. or Amazon.com Inc. each now exceeds the combined capitalization of all companies on Korea’s stock exchange.

The total market capitalization of South Korean firms was about $1.4 trillion as of Friday, data compiled by Bloomberg show. That compares with a $1.7 trillion valuation for Apple, while Microsoft and Amazon were each worth about $1.5 trillion.

The sobering comparison comes as South Korea’s benchmark Kospi Index is little changed this year, versus stock gains of 31% for the iPhone maker, 29% for the software firm and 60% for the e-commerce giant. Shares of Samsung Electronics Co., South Korea’s largest company and a top-10 supplier to Apple and Amazon, have dropped about 3%.

“South Korea has a pretty small domestic market and we can’t set a global standard or rule a market like U.S. or Chinese companies do,” said Seung Hoon Lee, head of equities at DB Asset Management in Seoul. “So no matter how great a business model a Korean software company makes -- for instance, everyone knows Naver and Kakao are good companies -- it is hard to get good valuations as there’s limit to their growth because of the small domestic market.”

At $269 billion, Samsung’s market value is a little more than a sixth of Apple’s. The Galaxy-brand producer’s revenue last year was just about a third less than that of the U.S. company, reflecting its role as a supplier of low-margin products such as memory chips, in addition to being one of the world’s largest makers of phones and consumer electronics.

Apple’s market value first overtook South Korea Inc.’s on Jan. 29, with Microsoft following about a week later while Amazon, after a bit of back and forth, has been worth more since June 30, the data compiled by Bloomberg show. MSCI Korea Information Technology Index, comprised of hardware firms like Samsung Electronics, Samsung SDI, LG Display Co., and SK Hynix Inc., fell about 0.2% this year compared with a 21% gain in the MSCI USA Information Technology Index.

Still, some South Korean internet and gaming stocks have rallied year to date, outperforming the Kospi, as Covid-19 pandemic lockdowns boosted demand for their products. Kakao Corp., a messaging-app operator, has jumped more than 100%, while NCSoft Corp. -- with games including Aion and Blade and Soul -- has surged about 60%.

South Korea’s exchange-listed companies include more than just tech producers such as Samsung, SK Hynix Inc. and LG Electronics Inc. The roster shows more variety when ranked by revenue, with Samsung, Hyundai Motor Co., conglomerate SK Holdings Co., steel producer Posco and Kia Motors Corp. comprising the top five in the past 12 months.

©2020 Bloomberg L.P.