China's Film Industry Takes Stock Market Beating as Trading Resumes Amid Coronavirus Crisis

China Stock Market - Getty - H 2020
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By Monday, the virus had infected 17,388 people in China and killed 362, heightening fears that it could be weeks, if not months, before the epidemic is contained.

Shares in China's leading film studios took an immediate dive Monday moments after the country's stock markets resumed trading after the long Chinese New Year holiday.

Most companies shares were suspended from trading not long after the opening bell, once had they fallen by the 10 percent daily maximum limit that Chinese regulators allow.

Wanda Film Holding, which operates China's largest theater circuit as well as major production and distribution businesses, fell 10.01 percent to RMB 15.56 per share, while fellow studio major Enlight Media was down 10.03 percent to RMB 9.51. Huayi Brothers Media crashed 9.9 percent to RMB 3.81 per share and Zhejiang Huace Film and TV Co. dipped 9.96 percent to RMB 6.96.

Publicly traded state-backed film entities took an equal beating. Beijing-based China Film Group, which imports most Hollywood titles into China, dropped 9.99 to RMB 12.43, and Shanghai Film Group, which has collaborated with Disney in the past and operates scores of cinemas in Eastern China, also fell by 9.99 percent to RMB 12.17.

The industry-wide plunge was widely expected once markets reopened, given how uniquely exposed the film sector has been to the nationwide coronavirus epidemic. China's week-long Lunar New Year holiday, also known as Spring Festival, typically is the country's busiest moviegoing period by far, and this year's holiday was expected to generate over $1 billion in box office revenue. But after health officials advised the Chinese public to avoid crowded places, studios pulled all of their holiday tentpoles from release and the nation's 70,000 movie theaters closed their doors.

Theaters remain closed and speculation about when the industry might resume normal operation is a topic of anxious speculation in Beijing.

China's markets last traded Jan. 23, the same day that Wuhan, the epicenter of the coronavirus epidemic, was put on a mandatory lockdown. At that time, officials had confirmed 800 infections of the virus and 25 deaths. By Monday, those totals had climbed to 17,388 infections and 362 deaths, making the coronavirus deadlier in mainland China than the 2003 SARS epidemic, which resulted in 349 deaths. 

Beijing has taken several steps to try to dampen the market reaction to the crisis — including suspending short selling and promising to inject RMB 1.2 trillion ($173 billion) of liquidity into the market — but Monday's opening was a bloodbath nonetheless: The benchmark Shanghai Composite Index fell 8.2 percent and the Shenzhen Composite dropped 8.3.

Thus far, the virus' damage to the film global industry has been concentrated within China. The one notable North American exception is Imax, which has 680 theaters in China, all of them currently closed. Shares in the large-format theater company's China subsidiary, which is listed in Hong Kong, are down 27 percent from their high last month.

If cinemas in China don't reopen soon — something few insiders currently expect — Hollywood product will begin losing potential revenue, too. 

Several high-profile U.S. Oscar-nominees were schedule to roll out in China this month: Searchlight's Jojo Rabbit on Feb. 12, Sony's Little Women on Feb. 14 and Road House's Marriage Story on Feb. 28. Sam Mendes' best picture contender, 1917, also was expected to open in February, along with studio tentpoles like Universal's Dolittle on Feb. 21 and Paramount's Sonic the Hedgehog on Feb. 28. Most analysts are now doubtful that any of these releases will take place as planned. 

Depending on how the epidemic progresses, studio tentpoles even deeper into the calendar, such as Disney's live-action remake of Mulan, scheduled for release in China on March 27, and the April Bond pic No Time to Die, also could be subject to costly delays.