Not just Tencent, will China hit video games?
Why Tencent sinks on the stock market. All the details
New blow to the Chinese tech giant Tencent.
The Chinese video game and technology company on Tuesday reported an 11% drop in the stock market after China's official news agency denounced online gaming as "spiritual opium" and "electronic drugs", fueling fears of a tightening. of Beijing on online entertainment.
Along with Tencent, the other online gaming industry groups, NetEase and XD, also experienced sharp downturns in Hong Kong after the fierce criticism of the gaming industry published by Xinhua News Agency .
Investors fear that the criticism is the first step towards a Beijing tightening for the online gaming sector, no different from the one that affected the e-commerce sector a few days ago.
Within hours, the article was no longer accessible on the Chinese agency's website, reports the WSJ , before reappearing later in softer tones. Meanwhile, Tencent said it will introduce stricter limits for younger users.
This is the second setback for the tech giant. Last week, Tencent announced a halt to user registrations for WeChat to "align itself with all relevant laws and regulations".
All the details.
THE COLLAPSE IN THE STOCK MARKET (AGAIN) FOR TENCENT
Tencent Holdings' stock tumbled Tuesday after a state-owned Chinese newspaper criticized online gambling as "opium for the mind."
Recall that the online gaming business generated 39.1 billion Rmb (6 billion dollars) in the first quarter and represented 30% of the group's total revenues.
Shares of Tencent, which had fallen more than 10% at the start of the session, balanced some losses after the article disappeared to close down 6.1% in Hong Kong at 446 Hong Kong dollars per share. . Equities have thus equaled the over a year low they hit last week.
The company's market value has lost $ 400 billion from its January peak, notes the Financial Times .
THE CRITICISM OF BEIJING TO ONLINE GAMING
On Tuesday, the Economic Information Daily, a newspaper affiliated with the state-owned Xinhua news agency, ran an article claiming that too much time playing online could negatively affect children, underscoring experts' demands for stricter regulation.
The article did not explicitly mention Tencent, but complained of widespread internet addiction among Chinese youth.
PREPARING FOR A STRICT REGULATORY?
The Beijing government news agency's article hinted at a regulatory tightening coming to online gaming as well.
In recent weeks, Beijing has implemented a real regulatory crackdown. The Chinese government is also tightening on the rules for overseas listing: the country's cyber security regulator has announced its intention to review all overseas lists of companies with more than 1 million users for reasons of national security.
Chinese authorities in recent months have been targeting e-commerce and online education, implementing new regulations to curb anti-competitive behavior after years of rapid growth in the tech sector.
What's up with online gaming now?
WHAT THE CHINESE TECH COLOSSUS WILL DO
The Chinese giant immediately ran for cover.
On Tuesday, Tencent said it will limit playing time for minors to one hour per day and two hours per day during the holidays. Children under the age of 12 will also be prohibited from making any in-game purchases.
In a social media post, the company said it is introducing the measures after "competent authorities" called for greater protection of minors in the game.
According to Chinese law, users under the age of 18 can play online games for up to one and a half hours per day and three hours during the holidays.
THE COMMENT OF THE ANALYSTS
According to Li Chengdong of the Haitun think-tank, Tencent had to react quickly as the article could represent the views of some officials. "The Internet industry is under fire and companies are nervous," Li said.
"The timing of the article certainly raises concerns among investors because of the crackdown we have seen recently [on Chinese technology]," said Daniel Ahmad, senior analyst at Niko Partners.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/non-solo-tencent-la-cina-picchiera-sui-videogame/ on Wed, 04 Aug 2021 06:49:07 +0000.