Shanghai, China:
China’s Tencent Holdings Ltd stated on Tuesday it would curb minors’ access to its flagship video game, hours just after its shares had been battered by a state media write-up that described on line games as “spiritual opium”.
Economic Information Daily cited Tencent’s “Honor of Kings” in an write-up in which it stated minors had been addicted to on line games and referred to as for more curbs on the sector. The outlet is affiliated with China’s largest state run news agency, Xinhua.
China’s biggest social media and video game firm saw its stock tumble more than 10% in early trade, wiping just about $60 billion from its industry capitalisation. The stock was on track to fall the most in a decade prior to trimming losses just after the write-up vanished from the outlet’s web-site and WeChat account.
The broadside comes days just after the securities regulator and state media sought to soothe investor fears more than the pace and breadth of industry reform that sparked a selloff in technologies and private education. The CSI300 index last week fell more than 5% for its largest month-to-month loss considering that October 2018.
The attack on the video game sector place investors back on edge.
“News once again caused market concerns about industry regulation,” stated Everbright Sun Hung Kai analyst Kenny Ng.
“Under this circumstance, it is expected that game stocks and even the overall technology stocks will still face continuous adjustment pressure,” he stated, adding focus will shift to irrespective of whether firms transform their policies for minors’ access.
In the write-up, the newspaper singled out “Honor of Kings” as the most preferred on line game amongst students who, it stated, played for up to eight hours a day.
“No industry, no sport, can be allowed to develop in a way that will destroy a generation,” the newspaper stated, likening on line video games to “electronic drugs”.
Tencent in a statement stated it will introduce measures to cut down minors’ access to and time spent on games. It also referred to as for an sector ban on gaming for children below 12 years old.
The business did not address the write-up in its statement, nor did it respond to a Reuters request for comment.
The write-up also hit rivals’ shares. NetEase Inc dropped more than 15% prior to paring losses to sit about 8% reduced in late afternoon trade. Game developer XD Inc fell 8.2% and mobile gaming business GMGE Technology Group Ltd dropped 15.6%.
Outside of gaming, investors had been also caught offguard by the State Administration For Market Regulation (SAMR) on Tuesday saying it would investigate auto chip distributors and punish any hoarding, collusion and cost-gouging. The semiconductor stock index subsequently fell more than 6%.
Youngster WELLBEING
A separate opinion piece published by the China News Service on its official Twitter-like Weibo account hours just after the Economic Information Daily write-up took a various tone, saying that blame could not be placed on any one party, like game developers, for kid addiction to on line video games.
“Schools, game developers, parents, and other parties need to work together,” stated the news outlet, which is also state-run.
Chinese regulators have considering that 2017 sought to limit the quantity of time minors commit playing video games and corporations like Tencent currently have anti-addiction systems that they say cap young users’ game time.
But authorities have in current months placed fresh focus on defending kid wellbeing, and stated they want to additional strengthen guidelines about on line gaming and education. Last month, they banned for-profit tutoring in core college subjects, attacking China’s $120 billion private tutoring sector.
That added to other regulatory action in the technologies sector, like a ban on Tencent from exclusive music copyright agreements and a fine for unfair industry practices.
At one point on Tuesday, Tencent was briefly de-throned as Asia’s most-precious firm by industry capitalisation by chipmaker Taiwan Semiconductor Manufacturing Co Ltd.
“It showed how investors are jumpy these days. They don’t believe anything is off limit and will react, sometime over-react, to anything on state media that fits the tech crackdown narrative,” stated Ether Yin, companion at Beijing-based consultancy Trivium.
“Government will not and can not get rid of the gaming industry… Restrictions will stay but not much room to go tighter,” he stated.
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