China crackdown jitters weigh on European video game companies

Pullup Entertainment SA

03/08/2021 10:54

(Adds analyst comments, updates share moves)
    ** Shares in European video gaming companies slide around
1-4% after China's state media outlet branded online video games
"spiritual opium", stoking concern that the sector may be next
in regulators' crosshairs  urn:newsml:reuters.com:*:nL1N2PA03U
    ** Shares in Amsterdam-listed tech investment firm Prosus
 PRX.AS , which holds a large stake in Tencent  0700.HK , fall
more than 6% following the Chinese video games giant's tumble
 urn:newsml:reuters.com:*:nL8N2PA282
    ** Sweden's Embracer  EMBRACb.ST  falls nearly 4%, Frontier
Developments  FDEV.L  3%, Ubisoft  UBIP.PA  and Embracer
 EMBRACb.ST  around 2%, while Sumo  SUMO.L  and Paradox
Interactive  PDXI.ST  slip over 1%
    ** Citi says the news on Tencent should not have major
direct operational or strategic implications for the European
video games sector, though the reaction shows how "jittery" the
market currently is on the topic of China tech regulation 
    ** The direct exposure of many European video games
companies to China is fairly low and the impact on their ability
to monetise content there is likely to be fairly small, it says
    ** However, Tencent's holdings in a number of European
developers could have an impact, Citi stipulates, pointing to
Ubisoft (Tencent holds c. 5%), Sumo (to be fully owned),
Frontier Developments (c. 9%) and Paradox Interactive (c. 5%)
 urn:newsml:reuters.com:*:nL4N2OV188
    ** Meanwhile, Equita analyst Gianmarco Bonacina believes
that though the situation is uncertain, the risk of a
restrictive regulation also on gaming, after those introduced on
fintech, e-commmerce and ed-tech, is now more concrete 
    **  Berenberg's Benjamin May, who covers Embracer, adds that
Take Two's  TTWO.O  disappointing results on Monday along with a
trend of delayed releases could be spooking investors
 urn:newsml:reuters.com:*:nL4N2P93HF
  
    

 (Reporting by Anna Pruchnicka and Sarah Morland)
 ((a.pruchnicka@tr.com))