Chinese investors have remained reluctant in making big bets on movie and film-related stocks despite China's recent order to reopen theaters and entertainment facilities following the months of movement restrictions and lockdowns. The main gauge tracking the country's studio and entertainment stocks only slightly increased this week after China's State Council announced on Friday that it was allowing cinemas to reopen.
The gauge, which tracks 40 companies ranging from cinema chain operators to film studios, dipped by 0.4 percent on Monday before gaining 1.2 percent on Tuesday. The slight fluctuations expressed traders' muted reaction to the reopening order, with most likely doubting the immediate return of moviegoers to cinemas any time soon.
Analysts at Jingxi Investment Management in Shanghai noted that despite the lifting of the restrictions, people are still not willing to visit places where big crowds gather. Most are likely still not willing to take the risk of getting infected, especially from people that are unaware that they have the disease. The company added that getting back to the same audience levels will still take a while and movie houses are not likely to see pre-crisis customer numbers given that they still have to implement social distancing rules.
Since January, close to a quarter of China's 3,000 movie theaters have remained closed. Over 1,000 theaters were forced to shut down in March after the government stepped up its efforts to control the spread of the virus. According to Northeast Securities, even if all of the theaters are to reopen in June, China's box office is still expected to decline by more than 44 percent this year. China's Film Administration estimates that the closures will likely result in a loss of about 30 billion yuan in box-office revenues for 2020.
While Chinese movie and entertainment stocks have remained flat, similar stocks in the US have not fared as well. Major Chinese studio stocks such as Wanda Film Holdings and Beijing Enlight Media have dropped by a few percentage points so far this year. Year-to-date, Wanda Film's share prices have dropped by 3.4 percent, while Beijing Enlight Media's shares have dipped by 7.4 percent.
The dips experienced by the Chinese firms do pale in comparison to the massive slumps experienced by the companies' US counterparts. Walt Disney's share prices have so far plummeted by more than 25 percent since the start of the lockdowns in the US, while Lions Gate Entertainment has seen its share prices drop by more than 28 percent.
