Across The Border | Why even a TV serial can cause a stock rally in China, and what it means for global investors
What does a horde of punters taking investment cues from a television serial tell you about a stock market?
Life imitated art in Shanghai when prime-time drama Ode to Joy caused frenzied investors to drive up the shares of Guizhou Redstar Developing, a producer of inorganic chemicals. The serial, based on the story of five young office workers’ lives in Shanghai, became the talk of the town as it addressed thorny social issues. But stock punters read deeper into the storyline, taking their cue from an attempt by one of the protagonist’s employers to acquire a firm bearing the name of Redstar.
Shares of Guizhou Redstar surged to the 10 per cent daily upper limit on three consecutive trading days – Friday to Tuesday – closing at 12.33 yuan (HK$14.63). Trade in the chemical company has been suspended since Wednesday.
The gains prompted the company to issue a statement to clarify that it was not a takeover target and that its fundamentals remained unchanged.
Redstar posted a loss of 190 million yuan last year.