China Film Stocks Jump After Shuttered Cinemas Allowed to Reopen
(Bloomberg) -- Chinese stocks linked to movies rallied after the government allowed reopening cinema halls that have been shut for almost four months in the fight to contain the coronavirus outbreak.
Entertainment and leisure facilities such as parks, tourist attractions, museums and theaters can reopen provided they take measures such as limiting attendance to control crowds, according to a guideline issued by China’s State Council on May 8.
Hong Kong-listed Maoyan Entertainment jumped as much as 9.6% on Monday, while Imax China Holding Inc. rose as much as 7.3%, compared with a 2.2% gain in the city’s benchmark Hang Seng Index. Alibaba Pictures Group Ltd. climbed as much as 9%.
The move by authorities signals China’s attempt to get the world’s second-biggest economy back on track as Covid-19 infections ease. Cinema halls in the country have stayed shut since late January, just when many producers were about to release their movies over the Lunar New Year holidays. The outbreak could cost about 30 billion yuan ($4.2 billion) in lost box office sales this year, China Film Administration estimated last month.
“The industry is finally seeing the light of dawn after a long freeze,” Huatai Securities Co. analysts including Zhu Jun, wrote in a note on Sunday.
Wanda Film Holding Co., which operates China’s largest cinema network, is making arrangements for resuming theater operations, its executives said on an earnings call on May 9. But the schedule will depend on updates from China Film Administration and local governments, they said. Part of billionaire Wang Jianlin’s business empire Dalian Wanda Group Co., Wanda Film reported a loss of almost 600 million yuan for the quarter through March, compared with a profit of 401 million yuan a year earlier.
Even after cinemas reopen, it remains uncertain whether viewers will return in droves with people still cautious about infections. Some of China’s theaters briefly reopened in March before the central government ordered them to close again. During the period, daily box office collections mostly remained under 50,000 yuan, compared with tens of millions of yuan on a typical weekday last year.
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