Chinese media’s broadside and retraction send Tencent, NetEase and gaming stocks on a roller coaster ride that costs billions

Tencent, NetEase plunged more than 10 per cent in Hong Kong, CMGE Technology lost 20 per cent in mainland

A Xinhua News Agency unit publication slammed games as ‘spiritual opium’ and ‘electronic drugs’ for teenagers, students and even married couples

Reading Time:2 minutes

Players competing in a match of Tencent's mobile game honour of Kings during the 3rd Yangtze River Three Gorges esports Games (TGEG) in Chongqing on 14 July 2019. Photo: Imaginechina

Published: 11:56am, 3 Aug 2021Updated: 5:53pm, 3 Aug 2021

China’s gaming stocks had a roller coaster ride on Tuesday, after a state-run newspaper published a denunciation of the sector, only to delete the article hours later.

Tencent Holdings, the world’s largest owner of mobile and computer-based game titles, fell 6.1 per cent at its close to HK$446, clawing back some of the 10.8 per cent loss earlier. It was the biggest intraday percentage drop in more than a year for the publisher of Honour of Kings, the first game to average over 100 million daily active players.

NetEase, publisher of the shooting game Halo, closed 7.8 per cent lower at HK$145.90, recovering slightly from its 15.7 per cent intraday plunge. Youzou Interactive, listed on the Shenzhen Stock Exchange, fell 4 per cent to 12.88 yuan, clawing back some of the 6.9 per cent intraday decline.

The Economic Information Daily, a Chinese-language broadsheet run by the state-owned Xinhua News Agency, published an analysis of school children’s education in the wake of the government’s crackdown on after-hours tuition classes. In an article that ran more than 5,000 characters, the newspaper described online games as “spiritual opium” and “electronic drugs,” while pointing out that Tencent’’s 2020 revenue was more than half of the entire industry’s income in China.

“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. Hours after the article was published, it was removed from the newspaper’s website, as it did not reflect the Chinese government’s stance, according to a source familiar with the matter.

The U-turn reflects the latest scrutiny on games publishers, which added 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.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x