Netease crashes 23% as China flags more online gaming curbs; Seen as an 'overeaction'
Investing.com-- Shares of Chinese gaming giant Tencent and smaller peer Netease fell sharply on Friday after authorities unveiled more regulations aimed at curbing player spending on online gaming.
Tencent Holdings (OTC:TCEHY) Ltd (0700)- the world's largest video game developer- closed 12.4% lower in Hong Kong trade, while NetEase (NASDAQ:NTES) Inc (9999) slumped 24.6%. The two were among the worst performers on the Hang Seng index, which shed 1.7%.
US-listed Netease shares fell more than 23% in pre-market trade.
The National Press and Publication Administration (NPPA)- the entity responsible for licensing and regulating video games in China- said it will impose spending limits on online games and will require operators to clearly present them within their games.
The agency also said it will ban online game operators from including inductive rewards, which it alleged misguided consumers into spending more time and money in games.
The proposed rules come as the latest round of crackdowns against online gaming by Chinese authorities, who have repeatedly cited concerns over videogame and internet addiction in the country’s youth.
But the new curbs also clash with earlier signals from China that it will ease up on restrictions against its internet giants, in a bid to spur economic growth in the country.
China’s videogame industry saw some signs of recovery this year after an over year-long crackdown that began in 2021. The NPPA had frozen the approval of new game releases for eight months, but had again begun approving new games this year.
Tencent clocked some growth in revenues from gaming in the third quarter, although a bulk of this came from the international market. Revenue from Value Added Services- which includes
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