Two Chinese music streaming companies, Cloud Music and Tencent Music Entertainment, led all music stocks with records for the second consecutive week.
Benefiting from the rise in Chinese stock markets this week, Cloud Music soared 31.5% to HK$121.50 (US$15.63), while Tencent Music Entertainment rose 24.6% to US$12.27. Cloud Music hit a new 52-week high of HK$123.40 (US$15.88) on Friday, bringing its year-to-date gain to 35.4%. Before this rally, Tencent Music had lost more than half its market value since hitting a 52-week high of $15.77 on May 16.
Chinese stocks had their best week since 2008 as investors reacted to China’s stimulus plan announced on Tuesday. One component of the plan is to allow banks to lend money to companies to buy back their stock, and for major shareholders to buy more shares of the company. As a result, the Shanghai Composite Index, which measures all stocks traded on the Shanghai exchange, surged 12.8% this week.
Led by China’s two largest music streaming companies, the Billboard Global Music Index, a float-adjusted index of 20 music business stocks, rose 4.4% in the week to September 27 to a record 1,956.63 point. The index saw 14 stocks advance and only six of the 20 stocks decline.
Music stocks handily outperformed most major indexes. In the United States, the Nasdaq rose 1.0% to 18,119.59 points; the S&P 500 rose 0.6% to 5,738.17 points. Britain’s FTSE 100 rose 1.1% to 8,320.76 points. South Korea’s KOSPI composite index rose 2.2% to 2,649.78.
K-pop stocks also performed well this week. The average stock prices of South Korea’s four major music companies have fallen sharply in 2024, with an increase of 14.4%. YG Entertainment rose 18.3%, SM Entertainment rose 16.9%, JYP Entertainment rose 14.2%, and HYBE rose 8.1%.
Spotify, BMGI’s most valuable component, rose 1.1% to $369.13. Spotify shares rose to a record high of $389.96 this week, but ended the week down $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 to “hold” from “underweight” and lowered the target price to “hold” from 27.00 euros ($30.16) and lowered the target price to “hold” from 27.00 euros ($30.16). €23.50 ($26.25).
SiriusXM was one of the few losers this week, falling 2.2% to $24.39. Morgan Stanley told investors on Tuesday that SiriusXM faces the risk of “further multiple compression” due to limited subscriber and revenue growth prospects. In other words, if SiriusXM is valued at 15 times earnings before interest, taxes, depreciation, and amortization (EBITDA), its growth prospects are probably worth the lower multiple.
Music streaming company LiveOne’s biggest decline this week was 23.2%. Radio station Cumulus Media fell 8.6% and French music streamer Deezer fell 8.0%.
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