Chinese gaming stocks slumped today, pushing Hang Seng almost 1.8% lower during the final pre-Christmas session. Sell-off was triggered after new regulation draft was announced by the Chinese National Press and Publication Administration. New rules proposed by Chinese regulators will ban rewarding players for logging into online games every day as well as rewards for in-game spending. Both those measures are common incentives in online games, aimed at keeping players as engaged as possible.
An unexpected announcement of new, harsh rules reignites fears over a regulatory crackdown in China, that was seen as an abating risk as of late. New rules are expected to reduce number of daily active users, as well as limited ways for video game publishers to earn in-game revenue. This could be a big shift, as in-game revenue was one of the most popular monetization strategies used by companies.
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Create account Try a demo Download mobile app Download mobile appShares prices of top Chinese video game companies like Tencent and NetEase plunged 12.4% and 24.6%, respectively, during trading in Hong Kong today. US-listed shares of NetEase (NTES.US) are currently trading 24% lower in US premarket.
US-listed shares of NetEase (NTES.US) are set to open at the lowest level since February 2023 after Chinese regulators announce a new set of draft rules for gaming companies. Source: xStation5
