Skip to main content

China Entertainment Stocks Hit as Market Crashes on First Trading Day of 2016

The drop sent jitters through stock markets around the world, with Asian and European markets hit, and U.S. stock futures trending down before the start of Monday's trading session.

Trading on mainland China’s stock markets was suspended on Monday, the first day of business of 2016, as the country’s weakening currency, combined with tepid surveys of domestic factory activity, spooked investors in the world’s second-largest economy, causing a massive sell-off, including of entertainment industry stocks.

The drop sent jitters through stock markets around the world, with Asian and European markets hit, and U.S. stock futures trending down before the start of Monday’s trading session.

The technology-heavy Shenzhen Composite stock index was hit hardest by concerns about the outlook for China’s economy, falling more than 8 percent, while the blue-chip CSI 300 Index dropped 7 percent and the benchmark Shanghai Composite declined 6.9 percent.

Trading was automatically suspended for 15 minutes shortly after 12 p.m. local time after indexes plummeted 5 percent. The temporary freeze was prompted by a new automatic circuit-breaker system introduced last year by Chinese regulators to limit volatility in times of crisis. Once trading resumed, shares continued to slide throughout the afternoon, prompting the system to shut down trading early for the day as the average decline across all exchanges came to 7 percent from their 2015 closing prices.

Cord Cutters Wreaked Havoc on Entertainment, Media Stocks in 2015

Shares in many of China’s leading entertainment companies were hit hard by the carnage. Wanda Cinema Line, China’s largest movie theater chain, finished the trading day down 10 percent at 108 yuan. Leading domestic film studio Huayi Brothers ended down 7.5 percent, while Enlight Media lost 9.8 percent of its value.

The trouble in mainland Chinese markets leaked across the border to the Hong Kong stock exchange, where the Hang Seng Index closed down 2.7 percent.

China’s leading tech companies, which have emerged as aggressive players in the entertainment space over the past few years, also slipped on the Hong Kong exchange. Tencent Holdings fell 2.3 percent, while Alibaba Group closed down 0.5 percent for the day. And the stock of Imax China ended the day down 1.9 percent.

Other Asian markets were also hit by the worries about Chinese economic growth, with Japan’s Nikkei 225 index in Tokyo falling some 3.1 percent. European markets also opened lower on Monday, hitting such entertainment stocks as those of U.K. broadcaster ITV and pan-European pay TV powerhouse Sky. The broad-based pan-European STOXX 600 index was down more than 2 percent midday.

The drop came as a disappointment to investors, who were likely hoping that the volatility that characterized the Chinese markets in 2015 was behind them. Shares climbed steadily throughout the first half of last year until a fall of some 30 percent in the Shanghai stock market in July.

This article was originally published by The Hollywood Reporter.