CasarsaGuru
Update: The article was updated with premarket stock movements.
NetEase (NASDAQ:NTES) and Tencent’s (OTCPK:TCEHY) (OTCPK:TCTZF) stock plunged on Friday after the Chinese government announced new draft rules for online gaming industry aimed at curbing the amount of money and time players spend playing the games.
Gaming giant Tencent’s stock fell about -12%, while rival NetEase slumped -21%, and Bilibili (BILI) fell around 11%, premarket on Friday. The new rules set panic among investors and has led to a wipe out of about $80B in market value from the three China’s companies on the Hong Kong and China exchanges, according to a Bloomberg report.
Some other Chinese stocks are also trading lower premarket — Alibaba, Baidu JD.com (JD) are down around 3%, JD.com (JD) and Weibo (WB) about 2% and PDD (PDD) about 4%.
South Africa-based Naspers (OTCPK:NPSNY) fell about 17% on the Johannesburg Stock Exchange and shares of Prosus (OTCPK:PROSY) (OTCPK:PROSF) which owns a stake in Tencent, fell about 17%. Naspers holds a stake in Prosus.
The National Press and Publication Administration, or NPPA, has brought out draft rules and is seeking opinions on the the same.
As per the draft rules, online games would not be allowed to set inductive rewards such as daily login, first-time recharge, and continuous recharge. All online games must set user recharge limits and announce them in their service rules.
Pop-up warnings should be issued to users for irrational consumption behavior. The rules also include caps on the amount each player can spend within a game.
Online game publishing business units should strictly control the time and duration for minors to use online games.
In addition, the draft rules also say that games must not contain content — promoting obscenity, pornography, gambling, violence or instigating crimes; insulting or slandering others and infringing upon others’ legitimate rights; endangering national unity and sovereignty, among other things.
The new draft rules caught the industry and investors by surprise and reminded many of a crackdown on the tech-sector in 2021. That years certain agencies imposed restrictions on sectors from e-commerce to entertainment, reining in Jack Ma-backed Ant Group and Alibaba (BABA), among others.
As per the NPPA the draft rules are aimed to standardize the order of the online game industry, protect the legitimate rights and interests of users, protect the physical and mental health of minors, and promote the healthy and orderly development of the online game industry.
In August, the Cyberspace Administration of China drafted guidelines for preventing minors from spending too much time on their smartphones, dealing a potential blow to social media providers.
Other stocks in the red on Friday: Kuaishou Technology (OTCPK:KUASF) (OTCPK:KSHTY) fell about 7% to HK$50.1 on the Hong Kong exchange.
Editor’s note: The draft rule document was translated to English from the local language, thus the words may not be an exact match.
More on NetEase and Tencent
Source link
