China’s gaming stocks slumped in early trading on Tuesday, as publishers and distributors were slammed by renewed denunciation by the state media on the sector.
Tencent Holdings, the world’s largest owner of mobile and computer-based game titles, plunged by as much as 10.8 per cent to as low as HK$423.60 in Hong Kong, the biggest intraday percentage drop in more than a year, extending the 27 per cent decline since July in the wake of China’s antitrust crackdown on its exclusive streaming music rights. Tencent is the publisher of Honor of Kings
, the first game to average over 100 million daily active players.
, publisher of the shooting game Halo
, plunged as much as 15.7 per cent to as low as HK$133.40, Youzou Interactive, listed on the Shenzhen Stock Exchange, fell 3.2 per cent to 12.99 yuan.
The condemnation, which first surfaced in late 2017
in China, was renewed again today by Economic Information Daily
, a Chinese-language broadsheet run by the state-owned Xinhua News Agency, as an analysis of school children’s education in the wake of the Chinese government’s crackdown on after-hours tuition classes. The newspaper described online games as “spiritual opium” and “electronic poison,” pointing out that the 2020 revenue of the industry’s dominant publisher Tencent was more than half of the income of the country’s entire industry.
“No industry or competitive skill should be developed through the destruction of an entire generation,” the article said, adding that regulators should step up its investigations and punish wayward publishers.
The latest scrutiny on games publishers add to the woes of a technology industry that is still reeling from more than six months of tightened regulations, from antitrust crackdowns on fintech to the outright ban of for-profit tuition schools.
The crackdown accelerated to the education industry, property and property management segment which caused burdens for parents for raising kids, as birth rate plunged in the nation and many young people are reluctant to having kids amid high costs and pressure of the items and services for children.
The rout has caused foreign investors fleeing the stock markets in China, with Cathie Wood trimming its US$1.66 billion holdings of China stocks. Around US$5 trillion had been erased from China’s markets and Hong Kong’s market value fell by 20 per cent that summer.
Yao, a character from Tencent's blockbuster online battle game Honor of Kings, dons a Burberry outfit. Photo: TiMi Studios/Burberry
Other gaming stocks also fell. CMGE Technology lost 20.2 per cent to HK$3.59. On the mainland, Wuhu Sanqi Interactive Entertainment Network Technology shed 7.8 per cent in Shenzhen to 18.40 yuan while Hangzhou Shunwang Tech, a service company for internet cafes, dropped 3.2 per cent to 13.97 yuan.
The declines among gaming stocks weighed on Hong Kong’s benchmark Hang Seng stock index. Tencent is the fourth-largest stock on the gauge, with almost 6 per cent weighting. The 58-stock Hang Seng fell by as much as 1.8 per cent to an intraday low of 25,774.62, with Tencent as the seventh-biggest decliner.