Recently beaten-down China online gaming stocks rebounded on Wednesday as Hong Kong markets reopened after a holiday to news of a more conciliatory tone on the sector by the top gaming regulator.
Shares of NetEase Inc.
NTES,
and Tencent Holdings Ltd.
700,
climbed 10% and 4.8%, respectively.
NetEase stock lost 24% of its value on Friday, with Tencent sinking 12% and U.S.-listed but China-based gaming group Huya Inc.
HUYA,
dropping 10% after China’s National Press and Publication Administration proposed curbing excessive spending on games by consumers, specifically younger players, and bans on rewards.
The draft rules also said gaming content should be prohibited from leaking “state secrets,” as the regulator opened the proposals to public comment Jan. 22, 2024.
On Monday, though, the regulator made a statement on WeChat that 105 new online games had been approved for December by the Game Working Committee of China Music and Digital Association, calling that “positive signals that support the prosperity and healthy development of the online game industry.”
Related shares did get something of a boost in U.S. trading on Tuesday, as Wall Street returned from a holiday break. Tencent is the parent of Tencent Music Entertainment Group
TME,
whose U.S.-listed shares fell 3.9% on Friday, but rose 1.2% on Tuesday. Huya shares gained 3.7%.
China shares have been some of the worst performers in Asia and globally in 2023 — the Hang Seng
HK:HSI
is down 16%, and set for its fourth straight losing year. The index bounced 1.8% on Tuesday.
The China government has periodically cracked down on the gaming industry in recent years, with concerns particularly focused on youth addiction and vision problems. A freeze on new games was imposed in 2021, then lifted later in 2022 for Tencent and NetEase.
This story originally appeared on Marketwatch
