Two Chinese music streaming companies, Cloud Music and Tencent Music Entertainment, set a record by topping all music stocks for the second week in a row.
Benefiting from gains in Chinese stocks this week, Cloud Music rose 31.5% to HK$121.50 ($15.63), while Tencent Music Entertainment rose 24.6% to $12.27. Cloud Music hit a new 52-week high of HK$123.40 ($15.88) on Friday, marking a year-to-date rise of 35.4%. Before the current rally, Tencent Music had lost more than half its value since hitting a 52-week high of $15.77 on May 16. Currently, Tencent Music’s year-to-date growth rate is 36.2%.
Chinese stocks had their best week since 2008 as investors reacted to the country’s stimulus package announced on Tuesday. The plan includes provisions that would allow banks to lend to companies for stock buybacks and allow large shareholders to buy more shares in companies. As a result, the Shanghai Composite Index, which measures all stocks traded on the Shanghai Exchange, soared 12.8% this week.
The Billboard Global Music Index, a free-float-adjusted index of 20 music industry stocks led by China’s two biggest music streaming companies, rose 4.4% in the week ending September 27 to a record high of 1,956.63. Recorded. BGMI has increased by 12.2% in the past. It reached a record high for three consecutive weeks. The index had 14 stocks in positive territory, and only 6 of the 20 stocks were in the red.
Music stocks easily outperformed most major indexes. In the U.S., the Nasdaq Composite Index rose 1.0% to 18,119.59, while the S&P 500 Index rose 0.6% to 5,738.17. In the UK, the FTSE 100 index rose 1.1% to 8,320.76. South Korea’s KOSPI composite index rose 2.2% to 2,649.78.
K-pop stocks also had a great week. All four of South Korea’s major music companies saw their values decline significantly in 2024, posting an average increase of 14.4%. YG Entertainment rose 18.3%, SM Entertainment rose 16.9%, JYP Entertainment rose 14.2%, and HYBE rose 8.1%.
BMGI’s most valuable component, Spotify, rose 1.1% to $369.13. During the week, Spotify stock rose to a new all-time high of $389.96, but by the end of Friday it had fallen $20. Universal Music Group, BGMI’s second most valuable component, rose 4.9% to 23.86 euros ($26.66). On Friday, Kepler Cheuvreux upgraded UMG from “downgrade” to “hold” and lowered its price target from €27.00 ($30.16) to €23.50 ($26.25).
SiriusXM was one of the few losers this week, dropping 2.2% to $24.39. Morgan Stanley told investors on Tuesday that SiriusXM faces the risk of “further multiple compression” due to limited prospects for subscriber and revenue growth. In other words, if SiriusXM is valued at, say, 15x earnings before interest, taxes, depreciation, and amortization (EBITDA), its growth prospects may be worth a lower multiple.
Music streaming company Live One had the biggest decline of the week, at 23.2%. Radio broadcaster Cumulus Media fell 8.6%, and French music distribution company Dieser fell 8.0%.
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