HONG KONG/BEIJING (Reuters) - Plans to limit the number of new online video games in China wiped a further $20 billion off Tencent Holdings’ market value on Friday, ratcheting up concerns over regulatory risks facing firms in the world’s No. 1 market for mobile games.
FILE PHOTO: Visitors attend the annual Tencent Games Carnival (TGC) in Chengdu, Sichuan province, China December 2, 2017. REUTERS/Stringer/File Photo
China’s Ministry of Education said late on Thursday the publishing regulator should also take measures to limit the amount of time young people spend playing games and explore an age-appropriate system for players.
The restrictions are the latest challenge to hit Tencent, China’s largest game operator, which earlier this month blamed a freeze on new game approvals for the technology giant’s first quarterly profit fall in nearly 13 years.
The disappointing results came a day after investors wiped around $15 billion off its market value on news that Chinese regulators had blocked it from charging for of one of its blockbuster titles, “Monster Hunter: World”.
Shares of Tencent, which has a market value of around HK$3.25 trillion ($414.12 billion), plunged as much as 5.3 percent, leading a slide in Chinese video game companies. The benchmark Hang Seng Index fell 1 percent.
Tencent has lost a staggering $164 billion in market value from its peak in January, chiefly on regulatory uncertainty, and now trails arch rival Alibaba Group to be Asia’s second biggest listed company by market capitalization.
Beijing’s latest regulatory directive was included in a document published on the website of the education ministry outlining how China would respond to worsening rates of myopia, or near-sightedness, among young people.
It blamed high levels of short-sightedness on a heavy study load, the spread of mobile phones and other electronic devices, and a lack of outdoor activities and exercise.
The document also called on parents to limit the amount of time their children spend using mobile phones and other electronic devices, and recommended children spend over an hour outdoors every day.
Analysts said while the regulatory overhang could put pressure on game-related shares, they expected top developers to be less affected.