Green light to reopen cinemas fails to ignite movie stocks as traders see Chinese filmgoers avoiding theatres while Covid-19 risk lingers
- A gauge of companies from cinema chains to studios has gained just 0.7 per cent since Beijing said on Friday night that cinemas can reopen after lockdown
- Even in the best-case scenario, China’s box office will fall more than 40 per cent this year, according to brokerage Northeast Securities
Stock traders are less than optimistic that Chinese moviegoers will rush back to theatres now they have been given the go-ahead to reopen after coronavirus lockdown.
A gauge of 40 companies from cinema chain operators to studios and film makers edged up just 1.2 per cent on Tuesday, having lost 0.4 per cent a day earlier, after China’s State Council said on Friday night that cinemas were free to reopen after an almost four-month shutdown.
The muted reaction reflects traders’ jitters about a possible resurgence of Covid-19, and their expectations that people will still wish to avoid enclosed public spaces for the foreseeable future.
“People dare not go out for big gatherings now, because of the potential risk of being infected by symptom-free cases,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “We don’t expect much of an audience going to the cinemas after the reopenings, which are more aimed at [benefiting] the industry.”
While China’s containment of the virus has cleared the way for the opening of cinemas, libraries, museums and other public places, pre-booking and social distancing requirements set out by the government means they will not be able to reach anything like capacity. So far, no cinemas have announced a specific date to resume selling tickets and releasing movies.
More than 3,000 movie theatres in mainland China, about a quarter of the total, have been closed for business this year, with about 1,000 of them being forced to shutting their doors permanently in March alone, according to Everbright Securities.
Assuming they reopen in early June, China’s box office will probably fall 44 per cent to 35.7 billion yuan (US$5 billion) this year in the best-case scenario, said Northeast Securities. The worst case would be a decline of 58 per cent, it said. China’s Film Administration estimates there will be a loss of 30 billion yuan in box-office revenues this year.