K-pop stocks rally on hopes of China lifting cultural ban
Shares of Korean entertainment companies, including top three K-pop powerhouses Hybe, JYP Entertainment and SM Entertainment, surged Thursday, buoyed by the prospect that China could lift its de facto ban on Korean cultural content.
Shares of Hybe, the K-pop giant behind BTS, reached a new 52-week high of 263,000 won ($183) during intraday trading. Its share price stood at 248,000 won as of 1:30 p.m., gaining 1.22 percent from the previous trading day.
SM Entertainment shares reached 99,700 won, up 3.32 percent. Shares of YG Entertainment and JYP Entertainment, rose by 11.47 percent and 0.62 percent, respectively. The three stocks all recorded 52-week highs on Thursday.
YG Plus, which is in charge of music distribution and intellectual property licensing for YG Entertainment, likewise saw its shares rising by 21.8 percent as of 1:30 p.m.
The anticipation also pushed a rally of production company shares, as investors bet that companies would benefit from content rights sales to China. Shares of A Story, behind hit TV series 'Extraordinary Attorney Woo,' hit the upper circuit limit of 30 percent, surging to 9,360 won.
Shares of Studio Dragon rose by 19.28 percent, reaching a 52-week high of 49,800 won as of 1:30 p.m. Entertainment mogul CJ ENM's shares inched up by 8.9 percent to 61,200 won.
According to a local news report, the Chinese government plans to lift its blanket ban on Korean entertainment content. Though the Chinese government has never officially acknowledged the ban's existence, the sanction is assessed to have been imposed as part of economic retaliation following Korea's decision to deploy a US Terminal High Altitude Area Defense antimissile system on its soil in 2016.
The news report quoted a senior official from the China-Asia Pacific Cooperation Center, a government body involved in preparing for the upcoming Asia-Pacific Economic Cooperation summits, saying the country plans to open borders to cultural exchanges with Korea by dispatching a delegation to the country next month. The report suggested a full reopening could come in May at the earliest.
'This is the time when the possibility of a ban lift is the highest in terms of the political and economic circumstances,' Shinhan Securities analyst Ji In-hae said.
"But as it has been a while (since Korea-China ties were cut off), the key intellectual properties of entertainment companies have not yet fully experienced the Chinese market. We cannot yet project which company will benefit the most from the lifting of the ban.'
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