Korea-China summit brings optimism to game, entertainment stocks

 A promotional image for DokeV, a video game developed by Korean game company Pearl Abyss / Courtesy of Pearl Abyss

Stocks of game and entertainment companies are drawing optimism that they may rally following a bilateral summit between leaders of Korea and China and a three-way summit including Japan this week.

The two-way and three-way talks between the leaders comes amid Beijing’s ongoing ban and restrictions on sales of games, dramas, concerts and other creative content from Korea.

Such restrictions, seen as politically motivated, continued under the Yoon Suk Yeol administration that openly pronounced a U.S.-aligned diplomacy amid major U.S.-China hegemonic rivalry.

Under the circumstances, Korea and China agreed on a range of economic issues that are welcomed by the game and entertainment companies.

The agreement included resuming negotiations to upgrade the bilateral free trade agreement (FTA) and cooperation on trade, investment and supply chains of key industries.

“The dialogue certainly raises hope for game companies to resume business in China after a years-long ban,” an industry source said.

These game companies include NcSoft on the benchmark KOSPI and Nexon Games and Pearl Abyss, listed on the junior Kosdaq bourse.

Among K-pop powerhouses, industry sources said SM Entertainment, YG Entertainment, JYP Entertainment and HYBE will benefit from 안전 increased profitability when the Chinese market fully reopens, with SM Entertainment expected to see the greatest benefit.

“The profit from a K-pop group is estimated to be 10 billion won or more for every concert it holds in China,” a source said.

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