Top news of the week
Mickey Mouse to call Shanghai home
After years of speculation, it is official now. Disney will build a new Disneyland in the Pudong area of Shanghai, the sixth in the world and the fourth outside the US. The news has been confirmed by the Shanghai government, which will own 57% of the project. The rest will be controlled by Disney. According to media reports, the first-phase of the project will occupy an area of about 1,000 acres, including a Magic Kingdom theme park, hotels, shops and other entertainment facilities. An estimated CNY 25 billion ($3.6 billion) will be invested, and the Magic Kingdom park will be open to visitors in 2014.
Mickey Mouse first showed up in front of the Chinese audience 23 years ago, when the popular cartoon was aired by China's largest TV station every Sunday night. Talks of building a Disneyland in Shanghai began in the early 1990s, shortly after the establishment of the Pudong New Area, but negotiations started in earnest only in the past few years, after Disney realised that its theme park in Hong Kong, opened in 2005, is too small to appeal to the vast majority of consumers in the Chinese mainland.
Obviously, the Disneyland project in Shanghai holds tremendous business potentials, creating jobs and generating tourism revenue for the city and its neighbouring areas. Some estimate that Shanghai is easily accessible to almost 1 billion people who live in areas within two or three hours by car or by train. The project comes at an opportune time too, as the Chinese government is keen to promote consumption as an economic growth driver to make up for slumping exports. There is no question that the theme park will be popular, since doting Chinese parents will be happily spending on theme park tickets, food, toys and accommodation to make their children happy.
It remains unclear as to how much investment will come from each side or how the revenue-sharing plan will be structured, as neither side has disclosed any information so far. What is clear, though, is that China will be careful not to repeat the mistake of the Hong Kong government, which has been criticised for its failure to gain control of the park operation despite hefty investment and a majority shareholder status.
Market recap
Reports of October PMI hitting an 18-month high, and
better-than-expected third-quarter results from the banking and
electronic sectors, led the stock market to record the largest weekly
gain in the past three months. Over the past five days, the Shanghai
Composite Index surged 5.6% to 3,164, while the Shenzhen Composite Index
increased 5.61% to 12,987.
Macro and industry updates
October PMI at 18-month high
Industrial activities continued to accelerate in October, as the Purchasing Managers' Index (PMI) rose to 55.2, up from 54.3 in September and the highest since last April. According to China Federation of Logistics and Purchasing, which compiles the index, China's PMI has stayed about 50 for the past 8 months. A reading above 50 indicates expansion.
Chinese funds report CNY 2.3 trillion under management
Statistics show that funds in China managed CNY 2.3 trillion ($336B) at the end of October, down by 2.25% from the end of June. The largest fund remains China Asset Management Company, which manages CNY 232 billion, or about 10% of the total asset under management. The top ten funds together control nearly 50% of the market.
Contributions from Iris Tan.
