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Tencent shares tumble after China tightens rules for younger video gamers

A logo of Tencent is viewed at its gross sales space on the 2020 China World Stunning for Swap in Providers and products (CIFTIS) in Beijing, China September 4, 2020. REUTERS/Tingshu Wang

Aug 31 (Reuters) – Shares of Tencent Holdings Ltd (0700.HK) dropped nearly 3% on Tuesday, after China announced contemporary rules forbidding below-18s from taking part in video video games for extra than three hours per week.

Beijing stated the transfer was as soon as well-known to remain increasing addiction to what it as soon as described as “non secular opium”. be taught extra

Jefferies analysts stated on Monday that they expected to spy about a 3% impact to Tencent’s earnings from the contemporary rules, assuming gaming contributes about 60% of its entire revenue. They additionally forecasted that its smaller rivals love NetEase will suffer restricted impact.

Mio Kato, an analyst who publishes on SmartKarma, stated however that the market reaction “grossly underestimates” the impact of the constraints.

“The muse of the problem right here is no longer the immediate revenue impact,” he stated. The difficulty is that this transfer destroys the entire behavior-forming nature of taking part in video games at an early age.”

Shares in Krafton Inc (259960.KS), the Tencent Holdings-backed (0700.HK) South Korean gaming company, fell 3.5%.

Tokyo-listed Nexon (3659.T) and Koei Tecmo (3635.T), which each and each and each delight in exposure to the Chinese language market, had been down 4% and 3% respectively.

Reporting by Donny Kwok and Brenda Goh; Additional reporting by Joyce Lee in Seoul and Sam Nussey in Tokyo; Editing by Himani Sarkar and Edwina Gibbs

Our Standards: The Thomson Reuters Belief Principles.

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