Hyundai Motor Group has overtaken LG Group in market capitalization, achieving a notable rise to third place among South Korean conglomerates, propelled by strong stock performances and strategic expansions, while LG Group faced declines in its key sectors. The photo shows the Hyundai Motor Group headquarters located in Seoul. /Hyundai Motor Group

Hyundai Motor Group overtook LG Group to become South Korea’s third-largest conglomerate by market capitalization.

As of the end of 2023, LG Group was the second in market capitalization in the KOSPI market, following Samsung Group. However, this year, it has been pushed down to fourth place, following SK Group and now Hyundai Motor Group.

According to the Korea Exchange (KRX) on Jun. 17, as of 9:10 a.m, the total market capitalization of the 12 listed companies under Hyundai Motor Group was 158.17 trillion won ($114.5 billion). This was $1.6 billion more than the combined market capitalization of $112.8 billion for the 11 companies under LG Group.

At the end of last year, LG Group’s market capitalization was $134.7 billion, compared to $96.3 billion for Hyundai Motor Group, showing a gap of over $36.2 billion. However, Hyundai Motor Group has managed to overtake LG Group.

The reason for this fluctuation is that the stock prices of the leading companies in each group have varied significantly this year.

Hyundai Motor’s stock price, which was worth about $143.88 at the end of last year, rose by more than 40% as of this morning. Kia’s stock price also increased by approximately 28.7% during the same period, driven by strong export performance and expectations of increased shareholder returns, which identified it as an undervalued stock.

Hyundai Motor’s stock price continued to surge on the news that its Indian subsidiary had submitted an initial public offering (IPO) application to the Indian stock market. There are speculations that Hyundai Motor’s stock price could exceed $217.46 if its Indian subsidiary goes public.

Hyundai Rotem’s stock has also surged, with a price increase of over 50% this year. Hyundai Rotem benefited from expectations in its defense sector and the recent successful export of domestically produced high-speed rail vehicles to Uzbekistan for the first time.

On the other hand, the overall market capitalization of LG Group was dragged down by the plummeting stock price of LG Energy Solution. LG Energy Solution’s stock price fell nearly 20% from $305.17 at the end of last year to $247.18 today. LG Chem’s stock price also recorded a decline of over 20% this year.

Both LG Energy Solution and LG Chem have been hit by a slump in the electric vehicle market and increased competition from Chinese companies. Due to these factors, global credit rating agency Standard & Poor’s (S&P) downgraded LG Energy Solution’s and LG Chem’s credit outlook from ‘stable’ to ‘negative’.

LG Display’s stock price also fell by more than 10% this year due to the impact of a significant capital increase. Meanwhile, LG Electronics rebounded at the end of last year, thanks to growth expectations in its heating, ventilation, and air conditioning (HVAC) division driven by the development of the artificial intelligence (AI) industry. LG Household & Health Care is also recovering, supported by strong cosmetics exports.

Securities firms also have a positive outlook on Hyundai Motor Group.

According to financial information company FnGuide, S. Korean securities firms have raised their annual consolidated operating profit forecast for Hyundai Motor by about $181.1 million compared to the beginning of the year. In contrast, the annual operating profit forecast for LG Energy Solution has shrunk by nearly $1.4 billion during the same period.