The Korea Herald

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Entertainment, cosmetics stocks fall amid China’s Hallyu ban

By Korea Herald

Published : Nov. 21, 2016 - 14:53

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China-sensitive stocks of entertainment and cosmetics firms nosedived Monday, after China reportedly banned Korean dramas and commercials featuring K-pop stars on China’s state-run TV stations in retaliation against Korea’s decision to deploy a US advanced missile defense system here.

On the Kosdaq market, stocks of S.M. Entertainment -- the nation’s largest entertainment agency which manages many K-pop acts -- plunged 8.2 percent to 25,900 won on Monday. YG Entertainment fell 6.9 percent to 26,300 won, while JYP Entertainment declined by 2.8 percent to 5,230 won.


Prior to the opening of the stock market, Chinese entertainment research services provider EntGroup said Beijing recently banned a local broadcaster from airing Korean dramas, movies and entertainment programs.

Following the news, production firm Chorokbaem Media’s shares went down by 8 percent to 2,120 won and film distributor Showbox’s shares plummeted 14.6 percent to 5,160 won. 

On the Kospi, cosmetics firms, which largely rely on exports to China, were also directly hit. LG Household & Health Care hit a 52-week low of 772,000 won during the morning trading. Cosmax BTI, Tonymoly and Korea Kolmar also hit a 52-week low.

Investor sentiment over China-related shares have remained jittery, even though more than four months have passed since Seoul announced that it would station the Terminal High Altitude Area Defense system here to cope with North Korea’s nuclear and missile threats.

Korea’s entertainment firms, cosmetics and retailers whose businesses are directly related to China have suffered losses in shares since the announcement on July 8.

Meanwhile, it has also reportedly become more difficult for Korean stars to engage in the Chinese entertainment business. Scenes featuring Korean singer Hwang Chi-yeul on a Chinese TV show were entirely cut out and the premiere of Korean drama “Saimdang, Light’s Diary” featuring actress Lee Young-ae has been delayed from October to next year, according to industry sources.

“Such a ban, if detailed out later, will limit drama production firms’ sales of overseas copyrights and hurt management fees of entertainment agencies. The Chinese ban on Hallyu, in the wake of the THAAD deployment decision, will keep weighing on the entire entertainment industry,” said Lee Won-seok, an analyst at NH Investment & Securities.

By Kim Yoon-mi (yoonmi@heraldcorp.com)