China gaming stocks get a breather after Beijing eases rules

Image Source: © Poringdown | Megapixl.com

Highlights:

  • China gaming stocks surge after Beijing relaxes licensing on new video games.
  • Top gainers include NetEase (NTES), Huya (HUYA), Bilibili (BILI), and DouYu (DOYU).
  • A year ago, China imposed regulations on game time for children under 18.

China gaming stocks got a breather from regulatory hurdles this week after Beijing relaxed the licensing rules. China on Monday resumed issuing gaming licenses, ending a month-long freeze on permits.  

Following the move, shares of NetEase (NTES), one of China’s biggest gaming enterprises, jumped more than 4% on Monday. Likewise, shares of live-streaming companies Huya (HUYA), Bilibili (BILI), and DouYu (DOYU) also soared. However, these stocks were down on Tuesday.

A year of a crackdown by the Chinese government has already crippled the domestic gaming industry. Overtly concerned about children’s gaming addiction, China last year decided to enforce regulations that restricted gaming time to three hours a week.   

However, investors remain cautious over market prospects as lockdowns continue to dampen China’s growth outlook and a surge in Treasury yields ahead of new US inflation data.

Despite the easing of gaming licenses and regulatory reforms, investors in China waited for the US inflation data before taking any calls.

Also Read: Top growth stocks that gave over 200% return

 © Poringdown | Megapixl.com

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Beijing fails to allay market uncertainties

Efforts by the Chinese government so far have failed to soothe market jitters. The wider Hang Seng Index tanked close to 9% in 2022, while China’s benchmark CSI 300 fell some 15%.

On Monday, the China Securities Regulatory Commission again offered to support the listed companies as part of the ongoing assistance to stabilize the market.  

Bottom line:

To monetize games, companies need to seek approval from regulators in China. On Monday, China’s National Press and Publication Administration gave the nod to 45 games. However, the names of NetEase and gaming behemoth Tencent were not on the list.


 


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