China’s regulator crackdown fails to curb investors. China’s tencent stocks gained 2% after an earlier decline of 4%. Other gaming shares also recover erased some of their losses.
Beijing wants to cut the downtime kids spend playing online games.
Investors have evaluated the effect of this move. The rise of Tencent shares helped the Hang Seng Tech Index gain.
Stocks of Bilibili Inc. and NetEase Inc. was still down. However, they were higher than their slumps in Hong Kong’s intraday lows. Tokyo gaming companies’ shares also moved out of the red slightly.
Meituan was surprised with better-than-expected quarter two revenue reports. The food distribution company’s shares came from a 2.1% decline and increased by 7.3%.
Marvin Chen, an analyst at Bloomberg Intelligence, said that the new laws and regulations had impacted earnings despite the regulatory crackdown. This is evident from Meituan’s solid earnings report.
However, there were significant moves at the market open when investors reacted to the increased regulations. The regulations were mainly applicable to ride-hailing companies to e-commerce and information security companies.
China restricts gaming playing time among youth
Bilibili was down 7.2% but came back to 2.2%, NetEase declined from 4.6% to 3.3%. However, minors make up a small amount of NetEase’s revenue from gaming.
Gaming platforms will only allow children to play games online for one hour on Fridays, from 8 pm to 9 pm. This includes weekends and public holidays. In 2019, teens could only play 1.5 hours per day.
Nexon Co. was down 3.2% lower in Tokyo, as well as Koei Tecmo Holdings. 28% of Nexon’s revenue came from China for the last financial year.
The concern among the Chinese government is the level of addiction to gaming. Gaming content is also strictly controlled in China.
It’s not the first time Tencent and NetEase face regulatory restrictions; they have been through many in the past.
An example is the pausing of new game approvals in 2018; this lasted for several months. However, Tencent and NetEase have proactively implemented playing time restrictions for youth. MetaNews to update further.