Hong Kong stocks slide as Tencent sinks 12%, NetEase crashes 25% on China’s new regulatory strike on online gaming

Name: China limits online gaming time for young people to 3 hours a week
Uploaded: 2023-12-22T02:54:49.000Z
Duration: 1 min 32 s
Description: China limits online gaming time for young people to 3 hours a week

Online gaming leaders Tencent and NetEase got hammered by 12 to 25 per cent in China’s newest measures to tighten industry

The Hang Seng Tech Index lost 4.4 per cent for the biggest drubbing since February 10

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An electronic board displays the latest stock and index levels outside the Exchange Square in Central, Hong Kong in May 2022. Photo: EPA-EFE

Zhang Shidongin ShanghaiandJiaxing Liin Hong Kong

Published: 10:54am, 22 Dec 2023Updated: 4:46pm, 22 Dec 2023

Hong Kong stocks slumped by the most in two weeks as China proposed tighter rules to control excessive spending in the online gaming industry in another black eye for the downtrodden market. The sell-off erased US$63 billion of market value from the biggest players Tencent Holdings and NetEase.

The Hang Seng Index dropped 1.7 per cent to 16,340.41 at the close, extending the decline for the week to 2.7 per cent. The Tech Index slumped 4.4 per cent, capping the biggest loss since February 10. The Shanghai Composite Index fell 0.1 per cent.

Tencent plunged 12 per cent to HK$274, the biggest drop since October 2008, while NetEase crashed 25 per cent to HK$122, the most on record. The two command about 9.1 per cent weighting in the Hang Seng Index and 14 per cent in the Tech Index. Elsewhere, Bilibili lost 9.7 per cent to HK$80.30 while Kuaishou slipped 7.2 per cent to HK$50.10.

The National Press and Publication Administration said online game players should not be rewarded for logging in daily and all games should set top-up limit and warn users about irrational behaviours, according to a draft published on Friday. Game servers must also be stored in China, it added.

“The market is panicking and people do not know where the policy direction is,” said Dickie Wong, executive director at Kingston Securities. “The regulatory uncertainty has been a drag for the past few years and investor already lacked confidence in the market. The new rules undermined their expectations for recovery.”

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China limits online gaming time for young people to 3 hours a week

China’s video-game industry, the world’s biggest, is poised to grow 14 per cent to 303 billion yuan (US$42.7 billion) in revenue this year, the highest since data began in 2003, according to the Game Publishing Committee of the China Audio-Video and Digital Publishing Association.

China last tightened rules in mid-2021 amid a tech sector clampdown by restricting playing time for youth and minors, sending the market into a tailspin and erased more than US$1 trillion of market value of Chinese tech stocks.