Tencent Promises New Gambling Restrictions After Media Slam On “Spiritual Opium” Drops Shares
SHANGHAI, Aug.3 (Reuters) – Chinese firm Tencent Holdings Ltd (0700.HK) on Tuesday announced that it would cut underage access to its flagship video game, hours after its shares were beaten by an article in the state media describing online games as “spiritual opium”.
Economic Information Daily quoted Tencent’s “honor of kings” in an article in which it said minors were addicted to online games and called for more restrictions on the industry. The outlet is affiliated with China’s largest state-run news agency, Xinhua.
China’s largest social media and video game company saw its shares fall more than 10% at the start of trading, wiping out nearly $ 60 billion from its market cap. The stock was on its way to plummeting the most in a decade before cutting losses after the item disappeared from the outlet’s website and WeChat account.
The broadside comes days after the securities regulator and state media sought to allay investor fears about the pace and scale of market reform that sparked a massive sell-off of the technology. and private education. The CSI300 index (.CSI300) fell more than 5% last week for its biggest monthly loss since October 2018.
The attack on the video game industry has put investors on high alert.
“The news has once again raised concerns in the market about industry regulation,” said Kenny Ng, analyst at Everbright Sun Hung Kai.
“Under these circumstances, it is expected that gaming stocks and even technology stocks as a whole will always face continued adjustment pressure,” he said, adding that the focus will be on on whether companies change their access policies for minors.
In the article, the newspaper named “Honor of Kings” as the most popular online game among college students who it said 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 said, comparing online video games to “electronic drugs.”
Tencent in a statement said it would introduce measures to reduce underage access and time spent on games. He also called for a ban on the games industry for children under 12. Read more
The company did not address the article in its statement, nor did it respond to a request for comment from Reuters.
The article also touched on the actions of rivals. NetEase Inc (9999.HK) fell more than 15% before cutting losses to about 8% lower in late afternoon trading. Game developer XD Inc (2400.HK) fell 8.2% and mobile game company GMGE Technology Group Ltd (0302.HK) fell 15.6%.
Outside of gaming, investors were also caught off guard by the State Administration for Market Regulation (SAMR) on Tuesday, saying it would investigate auto chip distributors and punish any hoarding, collusion and rising prices. price. The semiconductor stock index (.CSIH30184) then fell more than 6%.
A separate opinion piece published by the China News Service on its official Weibo Twitter-style account hours after the Economic Information Daily article took on a different tone, claiming that neither party could be blamed , including game developers, for children’s addiction to online video games.
“Schools, game developers, parents and other parties need to work together,” said the outlet, which is also run by the state.
Chinese regulators have sought to limit the time minors spend playing video games since 2017, and companies like Tencent already have anti-addiction systems that they say limit young users’ playing time.
But in recent months, authorities have focused on protecting children’s well-being and have said they want to further tighten rules around online gaming and education. Last month, they banned for-profit tutoring in basic school subjects, attacking China’s $ 120 billion private tutoring sector. Read more
This was in addition to other regulatory measures in the tech industry, including a ban for Tencent from exclusive music copyright agreements and a fine for unfair market practices. Read more
At one point on Tuesday, Tencent was briefly dethroned as Asia’s most valuable company by the market capitalization of chipmaker Taiwan Semiconductor Manufacturing Co Ltd (2330.TW).
“It showed how nervous investors are these days. They don’t believe everything is off limits and will overreact, sometimes overreacting, to anything that fits the story of the tech crackdown in state media.” Beijing partner Ether Yin said. Trivium advice.
“The government will not and will not be able to get rid of the gaming industry (…) The restrictions will remain but there will not be much leeway to tighten them,” he said. .
Reporting by Samuel Shen and Brenda Goh; Additional reporting by Yingzhi Yang in Beijing, Tom Westbrook in Singapore, Andrew Galbraith and Josh Horwitz in Shanghai; Editing by Vidya Ranganathan, Christopher Cushing and Nick Macfie
Our standards: Thomson Reuters Trust Principles.