Movie industry shares soared in Hong Kong on Tuesday in response to the bumper revenues being earned at the mainland China box office over the Chinese New Year holidays.
Leading the gains were Imax China and Alibaba Pictures, both of which have direct stakes in the box office boom. Imax China stock climbed by 31% to HK$18.36 per share at the close of trading. Alibaba Pictures managed an even greater 35% jump to HK$1.44 per share.
Mainland China stock markets remain closed until Thursday due to the continuing holiday period. That means there was no trade in the stocks of other companies involved in the box office scramble: Huayi Brothers (“Yin Yang Master”), Enlight Media (“Endgame”), Wanda Film (China’s largest exhibition chain and producer of “Detective Chinatown”) and exhibitor and distributor China Film Group.
With last Friday the biggest grossing single day in Chinese box office history, worth RMB1.45 billion ($245 million), the theatrical sector looks on course to break a string of records. Gross revenues in the four days from Friday to Monday were some RMB6 billion ($929 million), putting the ten-day holiday target well over $1 billion.
The stellar performance was achieved despite restrictions that limit cinemas in most of China to selling a maximum of 75% of their capacity, and only 50% in Beijing and some other provinces which had recently seen modest coronavirus spikes. China’s national government also issued a travel advisory, seeking to limit inter-province travel. While that looked like a restriction, keeping large numbers of people in the big cities, rather than letting them travel to the countryside, may have created a captive audience that played into the hands of the cinema exhibitors.
Imax operates some 700 screens in mainland China, many of which played top-performing title “Detective Chinatown 3,” a film which shot entirely using Imax cameras. By Tuesday afternoon “Detective Chinatown 3” had grossed $3.27 billion ($506 million), though after three huge days its pace was slowing and on Monday and Tuesday time travel comedy “Hi Mom” was topping the daily charts.
Alibaba Pictures was distributor of animation “New Gods: Nezha Reborn” which had clocked up RMB204 million (31.5 million) by Tuesday afternoon. But the company is also operator of Taopiaopiao, one of the two largest cinema ticket agencies in the country.
Its rival, Maoyan, which is also listed in Hong Kong, saw its shares climb by 9.6% on Tuesday.
The box office boom, and growing investor confidence in a process of economic normalization, lifted other entertainment stocks listed in Hong Kong. Huanxi Media (distributor of last year’s “Lost in Russia”) was up 5.4% on Tuesday, and Mei Ah jumped by 27%. That compared with a 1.9% gain for Hong Kong’s underlying Hang Seng Index and below par performances by the stocks of Alibaba Group and Tencent.
(Short video company, Kuaishou continued a gravity-defying ascent since its IPO earlier this month. Its shares advanced 1.3% to HK$403 apiece, compared with an offer price of HK$115. The loss-making company is now valued at $215 billion.)