Shares of South Korean movie producers and distributors rallied as China resumed the streaming of a Korean movie following a six-year hiatus, spurring hopes of more cultural exports.
Film distributor and producer Showbox Corp. jumped 15% on Wednesday, while KidariStudio Inc., a producer of online comics and other content, surged by the 30% daily limit. Other media stocks including Studio Dragon Corp. and CJ ENM Co. also rallied.
The market reaction underscores expectations that after years of a tacit ban on Korean entertainment, Beijing may finally be opening its doors to movies, which were among the last segments to still face restrictions. The two countries’ ties have gradually improved since a 2016-2017 tension over Korea’s deployment of a US-led missile defense system, which had caused a halt in Chinese group tourists for some period.
“This is another ‘green shoot’ that will raise hopes Beijing intends a foreign policy reset in Xi’s third term,” said Andrew Gilholm, director of analysis for China and North Asia at Control Risks. “But nothing very substantive has really happened yet. This is a very low-cost, low-impact kind of gesture.”
The resumption may help Korean cultural content producers return to the largest consumer market in the region, lifting earnings and boosting the appeal of the nation’s entertainment stocks.
President Yoon Suk Yeol’s office confirmed Tuesday that China has allowed the online streaming service. It added that President Xi Jinping acknowledged that such a halt in exchanges isn’t beneficial, the South Korean presidential office cited the Chinese leader as saying when the two met during the G-20 in Indonesia.
Chinese Foreign Ministry spokesman Zhao Lijian, however, denied at a regular press briefing in Beijing that an entertainment ban was ever in place, saying a number of Korean movies and TV series were introduced in his country last year.
The movie getting the spotlight is “Hotel By the River”. Tencent’s online streaming platform began distributing the film this month, local media outlets including Korea Economic Daily reported earlier.
For now, Chinese regulators will still need to review all films before distribution, which may take time, said Kim Hoi Jae, an analyst at Daishin Securities Co. Firms that have older dramas and movie titles, including Studio Dragon and ContentreeJoonAng Corp., may be have an advantage.
Yonhap News reported that few Korean movies have been available on screen or on online streaming services in China since the missile row. – BLOOMBERG