Shares of South Korean entertainment agencies soared on Tuesday buoyed by expectations that the free trade agreement with China could bring an economic bonanza to Asia’s fourth-largest economy.
Shares of SM Entertainment ― one of Korea’s three largest show business companies ― jumped by 7.82 percent and was traded at 29,650 won ($27.25) in the morning. The stock closed at 29,200 won per share.
YG and JYP Entertainment also saw big gains, being traded at 42,100 won and 4,280 won, an increase of 4.86 percent and 4.26 percent, respectively. YG and JYP closed at 43,150 won and 4,260 won per share, respectively.
“With the surge of Chinese people’s income, entertainment-related shares including fashion and travel are expected to last with long-term needs,” said Jung Ha-neul, a researcher at Hanwha Investment & Securities.
Analysts said entertainment and travel agencies have great potential for business expansion, followed by deregulation of the Chinese government.
They said local companies would export more content including music, films, dramas and TV shows to China in tandem with the popularity of Korean dramas and K-pop.
“Currently, the Chinese government is limiting the business opportunities of foreign firms to protect the domestic service market,” Korea Investment & Securities researcher Yeo Yeo-sang said.
“But it has a great chance for market expansion once China opens the service and investment sectors,” Yeo added.
