China's gaming stocks climb on report regulatory official removed (updated)

NetEase

03/01/2024 03:02

(Updates to add analyst comment, background)
       SHANGHAI, Jan 3 (Reuters) - Chinese gaming stocks rose
on Wednesday to outperform a weak broader market, after Reuters
reported China removed a gaming regulatory official.
    China's CSI Anime Comic Game Index  .CSI930901  gained as
much as 3.1% in early trading, against a 0.3% drop in the broad
market  .CSI300 .
    China removed Feng Shixin from a government body overseeing
its press and publications regulator, five sources who were
briefed on the matter said, days after Chinese gaming stocks
were hit by proposed rules to curb spending on video games.
    "The removal of the official aims to release goodwill to the
public and demonstrated its (China's) stance of maintaining
confidence in all walks of life," said Rukim Kuang, founder of
Beijing-based Lens Consulting.
    "It is expected that the proposed gaming draft rule will not
be implemented in the short term."
    Feng was removed last week from his position as head of the
publishing unit of the Communist Party's Publicity Department,
the sources said. The department oversees the National Press and
Publication Administration (NPPA), which, in turn, regulates
China's vast video games sector.
    The sources said Feng's removal was linked to rules the NPPA
announced last month that sent stocks in the world's largest
video games sector, including industry giant Tencent  0700.HK ,
plunging.
    The Chinese government did not immediately respond to a
request for comment about Feng's removal and Reuters was unable
to obtain his contact details to reach him for a comment.
    The NPPA's proposed measures, which seek to curb spending
and the use of rewards that encourage the playing of video
games, triggered fears that authorities were once again cracking
down heavily on the sector and wiped nearly $80 billion off the
market value of Tencent and NetEase Inc  9999.HK , China's two
biggest gaming companies.
    Shares in Tencent added about 0.5% and NetEase climbed 1.5%
on Wednesday, while the Hang Seng benchmark  .HSI  slipped more
than 1%.

 (Reporting by Jason Xue and Brenda Goh; Editing by Jacqueline
Wong and Muralikumar Anantharaman)
 ((Jason.Xue@thomsonreuters.com;))