Chinese Gaming Stocks Surge Amid Regulatory Official’s Removal
Chinese gaming stocks witnessed a notable upswing on Wednesday, surpassing the broader market, following reports indicating the removal of a gaming regulatory official in China.
In early trading, the CSI Anime Comic Game Index (.CSI930901) recorded a substantial gain of up to 3.1%, contrasting with the 0.3% decline in the broader market (.CSI300).
Feng Shixin, the official in question, was reportedly removed from a government body overseeing the press and publications regulator in China. This development unfolded shortly after proposed regulations aimed at curbing spending on video games had a detrimental effect on Chinese gaming stocks.
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Rukim Kuang, founder of Beijing-based Lens Consulting, shed light on the situation, stating, “The removal of the official aims to release goodwill to the public and demonstrated its (China’s) stance of maintaining confidence in all walks of life.” Kuang expressed optimism that the proposed gaming draft rule would not be implemented in the short term.
Feng’s removal, which occurred last week from his position as head of the publishing unit of the Communist Party’s Publicity Department, is directly linked to rules announced by the National Press and Publication Administration (NPPA) last month. The NPPA oversees and regulates China’s expansive video games sector.
Sources suggest that Feng’s removal had a direct impact on the stocks of major players in the world’s largest video games sector, including Tencent (0700.HK) and NetEase Inc (9999.HK). The proposed measures by the NPPA, aimed at restricting spending and the use of rewards encouraging video game playing, raised concerns about potential stringent regulations on the sector. This move resulted in wiping nearly $80 billion off the market value of Tencent and NetEase Inc.
The Chinese government has not provided an immediate response to requests for comment on Feng’s removal.
On Wednesday, Tencent’s shares increased by approximately 0.5%, and NetEase witnessed a climb of 1.5%. However, the Hang Seng benchmark (.HSI) experienced a decline of more than 1%, reflecting the delicate balance between regulatory shifts and market dynamics.
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