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$107.47 -4.3  -3.9%

Last Trade - 02/12/21

Sector
Technology
Size
Large Cap
Market Cap £57.39bn
Enterprise Value £50.41bn
Revenue £9.82bn
Position in Universe 174th / 7292

UPDATE 1-Chinese gaming and 'metaverse' shares battered by regulatory squeeze

Thu 9th September, 2021 10:14am
(Recasts, adds details, updates share prices)
    SHANGHAI, Sept 9 (Reuters) - Chinese gaming and
"metaverse"-related shares skidded on Thursday, dragged down by
an ongoing regulatory squeeze that has engulfed industries
ranging from online platforms and entertainment to for-profit
tutoring and real estate.
    In the latest blow to China's online gaming sector, the
South China Morning Post reported on Thursday afternoon that
Beijing had temporarily suspended approvals of new games,
further hitting shares in the likes of Tencent Holdings
 0700.HK  and NetEase  9999.HK .  urn:newsml:reuters.com:*:nL1N2QB0GC
    Shares in the two companies fell more than 8% and 13%
respectively.  urn:newsml:reuters.com:*:nL1N2QB0HF
    The decision to freeze new video game approvals was revealed
at a Wednesday meeting between Chinese authorities and gaming
firms including Tencent Holdings and NetEase, the report citing
unnamed sources said, adding that it was not clear how long the
suspension would last.
    Tencent declined to comment on the gaming approvals while
the National Press and Publication Administration, which is
responsible for greenlighting game tiles, and NetEase did not
immediately respond to a request for comment. 
    Stocks in listed gaming companies had already been battered
earlier in the day after state news agency Xinhua reported on
the same meeting. 
    Xinhua said the meeting aimed to ensure the companies
implemented strict new rules to curb gaming addiction among
minors, including a ban last month on under-18s playing video
games for more than three hours a week, but did not mention the
suspension of gaming approvals in the report.  urn:newsml:reuters.com:*:nL1N2QA18Z
    Xinhua also said that companies were told to "resolutely
curb incorrect tendencies such as focusing 'only on money' and
'only on traffic', and change rules and gameplay designs that
induce players to indulge."    
    Both Tencent and NetEase said earlier in the day they would
comply with the regulators' requests.
    "We suggest caution among the Big Tech Internet platforms
and online gaming companies," said Qi Wang, CEO of MegaTrust
Investment (HK).
    "The regulatory pressure will likely last for years not
months. Of course investors should take a more long-term view
but it’s still to early to tell which companies are better
positioned to deal with the on-going regulatory scrutiny."
            
    METAVERSE WARNING
    Global and domestic investors have been jolted by an ongoing
regulatory squeeze that has sought to root out some of the
perceived excesses of the runaway growth in some of China's new
economy sectors in recent years. 
    Separately on Thursday, Chinese state media cautioned
investors against blindly buying Chinese stocks hoping to profit
from the metaverse, a virtual shared space based on virtual
technologies.  urn:newsml:reuters.com:*:nL1N2QB02R
    The commentary by the official Securities Times follows a
recent surge in stocks such as Shenzhen Zhongqingbao Interaction
Network  300052.SZ  and Perfect World  002624.SZ  that are
perceived as developing the metaverse.  urn:newsml:reuters.com:*:nL1N2Q4098
    Shares in related stocks tumbled after the commentary was
published, with Wondershare Technology  300624.SZ  falling by
nearly 11% and Goertek  002241.SZ  down by almost 9%.
    Other regulatory measures have included a crackdown on
anticompetitive behaviour among online "platform" companies and
seeking greater control of the vast stores of data generated by
the industry.
    The transport ministry also said on Wednesday it would
intensify a crackdown on illegal behaviour in the ride-hailing
industry and deal with online platforms that are still using
non-compliant vehicles and drivers.  urn:newsml:reuters.com:*:nP8N2Q300P

 (Reporting by Brenda Goh and Alun John; Editing by Ana Nicolaci
da Costa)
 ((brenda.goh@thomsonreuters.com; +86 (0) 21 2083 0088; Reuters
Messaging: brenda.goh.thomsonreuters.com@reuters.net))
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