Source- BNN Breaking
Chinese online gaming stocks experienced a notable upswing on Wednesday, marking a recovery from previous losses following reassurances by the country’s principal gaming regulator. The resurgence came in the wake of the regulator’s commitment to revising and enhancing proposed regulations designed to curb excessive online gaming activities and spending.
Regulatory Revisions Elicit Market Response
China’s National Press and Publication Administration articulated its dedication to addressing stakeholders’ concerns in a WeChat statement issued on Saturday. This move followed the unveiling of stringent rules that had caused a plunge in the shares of major gaming companies like Tencent, NetEase, and Bilibili, listed in Hong Kong.
The regulator, responsible for overseeing new game releases in the world’s largest online gaming market, revealed its approval of over 100 domestic games on Monday, in addition to 40 imported games sanctioned earlier.
Market Response and Analyst Insights
Despite the regulator’s efforts to assuage concerns, Nomura analysts cautioned that while these measures might alleviate some worries, the shadow cast by the draft regulation remained substantial. The subsequent trading day witnessed a remarkable surge in NetEase shares by as much as 14%, partially recuperating from the preceding 25% nosedive on Friday. Tencent and Bilibili also saw positive rebounds of 4% and 6.7%, respectively, after experiencing substantial declines during the previous session.
Partial Recovery Amidst Lingering Uncertainty
Although Wednesday’s market rally demonstrated an upward trend, it only managed to regain a fraction of the substantial losses incurred before the Christmas long weekend.
Regulatory Focus Areas
The regulator’s statement emphasized a commitment to revising Articles 17 and 18 of the proposed rules, highlighting the prohibition of certain revenue-generating practices in online gaming. Specifically, these articles aim to eliminate compulsory player duels and restrain high-value transactions of virtual assets, alongside prohibiting daily login rewards.
Broader Context and Industry Landscape
These proposed rules arrive on the heels of a broader crackdown within China’s technology sector that commenced in late 2020.
Future Directions
The ongoing pledge by the Chinese gaming regulator to refine the draft rules underscores a continued effort to strike a balance between fostering a healthy gaming environment and addressing concerns surrounding excessive gaming activities and spending.
As the market navigates this regulatory landscape, stakeholders remain vigilant, observing the evolving scenario in one of the world’s most influential gaming markets. The future trajectory of these revisions holds substantial implications for the gaming industry within China and beyond.
