Expectations for the Lifting of China's Hallyu Ban... "Gaming and Content Industries Anticipated to Benefit"

Simple Consumption-Related Industries May Benefit Less from COVID-19
Game and Content Sectors Closely Linked to 'Untact' Expected to See Concentrated Gains

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Expectations for the lifting of China’s Hanhanryeong (Korean Wave ban) are causing stock prices in sectors sensitive to Chinese consumption, such as entertainment, gaming, and content, to fluctuate. In particular, it is analyzed that the gaming and content sectors, which can directly benefit from non-face-to-face (untact) trends due to the novel coronavirus disease (COVID-19), could lead to substantial performance improvements.

According to the Korea Exchange on the 1st, YG PLUS, a subsidiary of YG Entertainment, recorded 4,045 won, up 22.49% from the previous day, from the market opening. Following the previous day’s intraday upper limit price, it showed a strong performance for two consecutive days. Drama production company Studio Dragon also reached its highest price of the year at 90,500 won after hitting the upper limit price the previous day. Stock prices of gaming companies such as Netmarble (8.19%), Pearl Abyss (8.75%), and Com2uS (10.60%) also fluctuated.

Expectations for the lifting of Hanhanryeong began to spread after the Korea Tourism Organization and China’s leading travel company Ctrip jointly promoted Korean tourism products the previous day. Liang Jianzhang, one of the co-founders of Trip.com, personally appeared to introduce travel destinations, and Korean tourism products appeared in the “Super Boss Live Show,” which offered discounted hotel accommodations and tourism products. Since the South Korean government deployed the Terminal High Altitude Area Defense (THAAD) system in 2017, leading to China’s imposition of Hanhanryeong in retaliation, this is the first time Korean tourism products have been officially sold throughout China. Although the Korea Tourism Organization stated that “Hanhanryeong has applied to package products for group travelers, and this promotion event sells single travel products such as hotels and tourist facilities to individuals, so it is unrelated to Hanhanryeong,” the market immediately reacted to the joint tourism product promotion appearing for the first time in four years.

However, since the spread of COVID-19 remains, it is analyzed that the sectors that can gain actual benefits will be limited. For duty-free shops and travel sectors, where consumption mainly occurs offline, performance improvements may be limited due to the impact of COVID-19. Entertainment agencies centered on drama and idol groups may also experience differences in the timing of benefits. While dramas can be aired with approval from the National Radio and Television Administration, performances by entertainers require approval procedures from local governments and public security authorities.

The gaming sector, considered a beneficiary of the untact trend, is expected to gain the greatest benefit. Since the government is pushing to resume the issuance of release permits (game licenses) in China, which have been blocked since 2017, a completely new market could open. Jae-min Ahn, a researcher at NH Investment & Securities, predicted, “The Chinese mobile game market is formed at a scale of 27 to 28 trillion won, more than three times larger than Korea’s, and Chinese gamers prefer the massively multiplayer online role-playing game (MMORPG) genre, which is the main focus of Korean companies, so benefits are expected.”

This content was produced with the assistance of AI translation services.