When the stocks of Shenzhen-listed film production company Huayi Brothers plunged nearly 10 per cent lower on Wednesday (it closed with a 9.2 per cent dive) – the day before its much-anticipated comedy Personal Tailor hits Chinese cinemas – many blamed fund managers who had been invited to a premiere on Tuesday night.
The fund managers, apparently unimpressed by the film, dumped their stocks in Huayi Brothers in droves on Wednesday, leading to a loss of more 3 billion yuan (HK$3.8 billion) for the studio. The dramatic twist surprised individual investors, who had seen company share prices increase by 30 per cent from the beginning of December in the days leading up to the release of the latest film.
According to information disclosed by the Shenzhen Stock Exchange, three fund management firms each sold 214 million, 172 million, and 105 million yuan of Huayi's stock, topping the chart of investors unloading the stock on Wednesday.
Directed by the famed Feng Xiaogang and written by novelist Wang Shuo, Personal Tailor describes the adventures of a group of actors who begin a start-up company to help people live out their fantasies. The movie is believed to be a sequel to Feng's 1997 hit The Dream Factory, also written by Wang Shuo.
Video: Trailer for Personal Tailor
Boasting a star-studded cast, the movie had already made 80 million yuan from product placement deals, sources said. Rumours also circulated that a reality TV show licensed by Huayi with the same name was also under discussion.
Yet before the Chinese public were give the chance to see the film, several reviews, believed to be penned by fund researchers who had attended the screening, surfaced on investment forums on Wednesday, dampening whatever hopes Huayi might have had for a vote of confidence from its institutional investors.
"The theme was vague and plot was so inconsistent," read one review.
"It was way below my expectation – I wanted to leave halfway through it," another reviewer wrote.
More negative reviews had been published online by Thursday at noon. On movie review site Douban, Personal Tailor received a rating of 5.2 out of 10.
Summer Yin, a media strategy specialist at Ominicom Group Beijing, said while some Chinese film studios had invited investors to premieres in the past, the practise had been consistently used by Huayi Brothers for movies directed by Feng Xiaogang, a name they believed would boost box office earnings.
Markets have in the past responded differently to types of movies, Yin said. After Huayi Brothers released Feng's Back to 1942 last year,a historical film about a major famine in Henan during the second Sino-Japanese War, its stocks plunged 10 per cent on the second day of its release.
Murong San, an independent finance commentator in Shenzhen, said it was unfair for Huayi Brothers to have only invited institutional investors to the screening.
"Individual investors are also entitled to the information gathered from the screening, but now they are 20 hours behind," he said.
Murong suggested that in the future, Huayi should invite both institutional and individual investors to screenings to ensure fairness.
"Even if the practice breaks no laws, it's wrong," he added.