Shanghai Disneyland Open for Business
The new Shanghai Disneyland is now open, an event that the public in China has been waiting for for the last year. And even before the gates opened of the $5.5 billion theme park, the Walt Disney Company had announced that they were planning an $800 million expansion of the park, thanks to the huge demand that they were already seeing. The new park symbolizes more than just Disney’s global reach. It shows a growing cooperation between China and the United States. The park is only 43 percent owned by Disney. The rest of the park is under Chinese state control. It took almost two years of negotiations to finalize the plans for this, but now that the park is open to the public, hopes are higher than ever.
Disney has seen some huge struggles of their own lately, watching their stock drop significantly in price over the last year. Today, as the stock struggles to get back up over $100 per share, Disney is looking for ways to grow in value over the long term. The Disney name is huge—just ask any Star Wars or comic book fan—but there are definitely areas of improvement for the company. But this park is about more than that. It’s the first Disney park to open on the Chinese mainland, and it shows the world’s largest economy working side by side with the world’s second largest economy.
For those looking to invest in the company, it goes a step further. It shows one of the most famous brands in the world planting themselves in an economy where huge growth is still expected, and they are doing so at a very convenient time. Over the last several months, the Chinese economy has been shrinking rapidly. However, as you probably know, economies don’t do this for forever. The general trend of almost every economy in the world is upward, and for the Chinese economy to have been struggling for so long gives it even more of an opportunity for future growth. To have the new Disneyland open at this time, when the most obvious direction that the Chinese stock market can go is up, is giving Disney a platform for long term success in China. So, while binary options and day traders are focusing on the short term volatility and swings that companies, currency pairs, and other assets see, a company needs to focus on looking at things five, ten, or even twenty years down the road. It’s uncertain if Disney will go back up over $120 a share like they once were by the end of the year, but by putting themselves in this very lucrative position—the world’s most heavily populated country—they are giving themselves a huge edge when it comes to what their books will look like in the future. Even if they technically own less than half of the park, the profit numbers will be immense.
Other companies have already been doing this. Look at Apple, for example. They have several locations in China, and they do quite a bit of business there. But, as the Chinese economy contracted before, Apple also lost many opportunities. Their profits shrunk with the economy. Disney was largely able to avoid that. Sure, there’s a likelihood that the Chinese stock market will not head directly upward from here on out, but the old adage of buying low and selling high more directly pertains to their situation. As you craft your own trades, though, be sure to take into account the technical information specific to a precise moment. This overall fundamental data should create a general trend, but that doesn’t always apply to a specific trading opportunity.