Although the new regulations have recently slowed the rise of many Korean entertainment companies, Korean stock analysts said that the impact would be minimal.
On September 7, Mirae Asset Securities stated, “This will have no problem with expanding KPOP fandom and increasing profit”. They added, “The cancellation of BTS concert tours and China’s regulations are only temporary variables that cannot change the direction of KPOP’s development. We have positive expectations for the performance of KPOP in the 3rd quarter of the year due to the line-up comebacks of many major groups and the growth in the fandom of each company’s next generations.”
Recently, the movement of China’s Government aiming at the entertainment industry is fierce. Not only do the Government strengthen their control of celebrities who caused social controversies, but they have also put a crackdown on idol fandoms. New regulations for strengthening the idol fandom’s culture were carried out. Therefore, Weibo has suspended 21 fan accounts of many famous KPOP idols for supporting idols in irrational ways.
The intense regulations have also worried many Korean entertainment investors. As a result, noticeable drops in the stocks of many big agencies were recorded over the past month (from August 7 to September 6). For instance, HYBE‘s stock fell 7.5%, and JYP fell 7%. During the same period, SM recorded a decline of 6%, and YG‘s stocks also went down by 1.9%.
However, stock analysts believe China’s regulations will only have a limited impact on the Korean entertainment industry. They stated, “Records in China only account for 0.6 to 2% of the sales of the above 4 companies. Therefore, the influence of the banning on duplicate purchases is minimal”. Referring to concerts, advertising, and broadcasting activities, they said, “China does not contribute to Youtube profits, so it is impossible for China to affect these activities.”
An analyst from Eugene Investment & Secur explained, “The Chinese Government’s regulations are showing a low trend due to the fact the sales of Korean entertainment companies in China do not account for large proportions.”. Another analyst from Hyundai Motor Securities also expressed a similar idea.