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Updated December 27th, 2023 at 11:41 IST

Tencent, NetEase rebound as regulators assure changes to gaming rules

The initial concerns arose after Chinese regulators unveiled draft rules aimed at restricting spending and rewards linked to video games.

Business Desk
Tencent, NetEase plunge after China's decision to curb gaming spend
Tencent, NetEase plunge after China's decision to curb gaming spend | Image:Unsplash
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Shares of Chinese online gaming giants Tencent Holdings and NetEase rose on Wednesday, marking the first trading day after regulatory authorities assured modifications to proposed rules that had previously triggered a sharp decline in gaming company stocks.

Tencent's Hong Kong-listed shares showed a 3 per cent recovery, bouncing back from 12 per cent dip on Friday. The positive movement followed a two-day closure of Hong Kong markets for public holidays on Monday and Tuesday.

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NetEase shares jumped 4 per cent, contrasting with 25 per cent decline on Friday. The recovery was further propelled by local media reports indicating renewed talks between NetEase and Blizzard, the creator of World of Warcraft. The two companies had parted ways abruptly a year ago.

Earlier this month, Blizzard China, the Chinese subsidiary of Blizzard, announced on Weibo that it is in discussions with publishing partners in China to continue the game's service in the country.

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The initial concerns arose after Chinese regulators unveiled draft rules aimed at restricting spending and rewards linked to video games, raising fears of a renewed crackdown on the gaming sector. However, in response to the substantial decline in gaming stocks, China's video game regulator, the National Press and Publication Administration, appeared to adopt a more flexible stance. In a statement released on Saturday, the regulator expressed the intention to enhance the proposed rules after a thorough examination of public opinions.

On Monday, the regulator granted new licenses for 105 domestic online games for December, a move interpreted by analysts as a strong indication of continued support for the development of online games by the authorities. This regulatory shift contributed to the recovery of confidence in the gaming sector.

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The market dynamics highlight the sensitivity of gaming stocks to regulatory developments in China and the potential impact on investor sentiment. As the regulatory landscape evolves, industry participants will closely monitor further developments to gauge the future trajectory of the gaming sector in the country.

(With Reuters inputs)
 

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Published December 27th, 2023 at 09:15 IST

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