By Kwanwoo Jun
Amorepacific Group's shares slumped Monday amid South Korea's renewed diplomatic tensions with China, a key market for the conglomerate.
Shares of the South Korean beauty-product group fell as much as 8.1% to 27,800 won ($21.59), on course for their sharpest daily percentage decline in a month, underperforming the benchmark Kospi index's 0.5% fall in early afternoon. Its flagship cosmetics subsidiary, Amorepacific, fell up to 4.8% to KRW102,100.
After China summoned South Korea's ambassador in a tit-for-tat move, the diplomatic row on Monday continued to weigh on sentiment among investors in Amorepacific, whose cosmetics sales in China usually account for well over 50% of its total revenue generated in Asia.
Amorepacific's first-quarter revenue and operating profit fell 22% and 59%, respectively, from a year earlier largely due to a plunge in cosmetics sales in China and at duty-free shops where Chinese tourists and resellers are major clients.
Hana Securities analyst Park Eun-jung said in a recent research note that Amorepacific's recovery could take longer on softer-than-expected cosmetics demand in China, though a likely pickup in visitor traffic at duty-free shops could help boost cosmetics sales gradually later in the year.
The latest dispute flared up when the Chinese ambassador to Seoul, Xing Haiming, at a meeting Thursday with South Korean opposition leader Lee Jae-myung, made a rare public warning against the Seoul government for siding with the U.S. in the intensifying Beijing-Washington competition for global influence.
"Those who now bet on China's defeat will surely regret it later," Xing told Lee at the widely televised meeting, which led to a series of complaints and envoy summons in the following days.
South Korea has long strived to strike a delicate balance between China, its largest trading partner, and the U.S., its decadeslong military ally.
The current conservative Yoon Suk Yeol government, inaugurated in 2022, is widely viewed as cherishing its closer ties with the U.S. than its previous administrations to counter North Korea's growing nuclear and missile threat.
Write to Kwanwoo Jun at firstname.lastname@example.org
(END) Dow Jones Newswires
June 12, 2023 02:32 ET (06:32 GMT)Copyright (c) 2023 Dow Jones & Company, Inc.