Tencent shares fall after China tightens rules for young video gamers (updated)
31/08/2021 03:32
(Adds analysts comments, changes media slug)
Aug 31 (Reuters) - Shares of Tencent Holdings Ltd 0700.HK
dropped nearly 3% on Tuesday, after China announced new rules
forbidding under-18s from playing video games for more than
three hours a week.
Beijing said the move was necessary to stop growing
addiction to what it once described as "spiritual opium".
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Jefferies analysts said on Monday that they expected to see
about a 3% impact to Tencent's earnings from the new rules,
assuming gaming contributes about 60% of its total revenue. They
also forecasted that its smaller rivals like NetEase NTES.O
will suffer limited impact.
Mio Kato, an analyst who publishes on SmartKarma, said
however that the market reaction "grossly underestimates" the
impact of the restrictions.
"The root of the problem here is not the immediate revenue
impact," he said. The problem is that this move destroys the
entire habit-forming nature of playing 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
both have exposure to the Chinese market, were 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)
((donny.kwok@thomsonreuters.com; +852 2843 6470;))