The Chinese government's attempts to calm the country's volatile stock markets appeared to have failed as stock prices on the Shanghai, Shenzhen and Hong Kong exchanges plummeted on Monday after a recent market rebound.
Bloomberg reported that the Shanghai Composite Index's 8.5 percent decline to 3,737.51 was its biggest drop since February 2007. The Hang Seng China Enterprises Index was down 4.4 percent in Hong Kong as of 4 p.m. local time before the trading day ended. The Shenzhen Stock market, in which a number of entertainment companies such as Huayi Bros. are listed, was down 7 percent.
Among Chinese entertainment stocks, Huayi was down 10 percent, Chinese investment group Fosun, which is financing ex-Warner Bros. executive Jeff Robinov's Studio 8, saw its stock drop 9 percent, China Star Entertainment down 12 percent and Alibaba Pictures was down 11 percent. Beijing Enlight Media was one of the rare Monday gainers as its stock rose 3.4 percent.
One market observer said the return of the market woes after a recent rebound could hit consumer confidence in China where economic growth has already been slowing. Some have also expressed concern about possible social unrest since many small investors have put their savings into the stock market in recent years.
Cowen & Co. analyst Timothy Arcuri last week downgraded Apple's stock from "outperform" to "market perform," citing consumer spending trends in China. "Evidence of a widespread demand reset from China is mounting," he said, citing auto figures, among other things.
The Hollywood Reporter found that most Chinese entertainment giants are little concerned by the hugely volatile recent performance of the country's stock exchanges, buoyed by the fundamentals in the industry. "I do not expect any significant impact on the film business due to the stock-market slide. It may affect some productions, but most production money is not from public companies," Jimmy Wu, founder and CEO of the Lumiere Pavilions theater chain, told THR.
Chinese box-office revenue is rising by 30 percent a year, and film quotas are set to be lifted in coming years, which experts expect will continue to fuel expansion.
This story was originally published by The Hollywood Reporter.