Tencent Sees Rebound As Beijing Softens Gaming Restrictions
by Shahnawaz Alam News 27 December 2023
Tencent Holdings Ltd. experienced a notable uptick of nearly 4% as Beijing signaled a willingness to ease proposed gaming restrictions, alleviating concerns among investors anticipating renewed curbs on the world’s largest mobile gaming arena.
In response to the positive signal from Beijing, Tencent saw a climb of up to 3.9%, and its smaller rival, NetEase Inc., surged over 14% in their first post-announcement trading session. Bilibili Inc., a popular gaming-focused streaming service, also joined the upward trend with a gain of more than 6%. However, these rebounds only managed to recoup a fraction of the staggering $80 billion market hit suffered on Friday when regulators imposed new restrictions on in-game spending and playing time.
Despite the partial recovery, Tencent remains down approximately 9% since the regulatory changes were unveiled. The unexpected restrictions revived memories of the tech-sector crackdown in 2021, raising concerns among investors and industry players alike.
The government’s attempt to assuage market fears became apparent over the weekend. State-backed media carried positive comments from industry groups regarding the guidelines, while the regulator approved a record 105 games for domestic publication and promised a review of more controversial mandates. Several gaming companies also announced share buyback plans, showcasing confidence in the face of uncertainty.
Analysts, including those from Citigroup Inc., view the normalized approval schedule as a positive signal, suggesting ongoing government support for the healthy development of the online games industry. However, investor caution persists, with hopes that regulators might reconsider some of the more contentious rules, as they gather industry feedback over the next month.
As the gaming sector navigates this evolving landscape, the aftermath of the Christmas Eve regulations underscores the lingering apprehension surrounding tech regulations in China. The month ahead will be crucial, as industry feedback and potential rollbacks will shape the trajectory of the gaming sector in the wake of these unexpected regulatory shifts.
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