Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Tencent vows fresh gaming curbs after 'spiritual opium' attack zaps $60 billion

08/02/2021 | 10:40pm EDT
FILE PHOTO: A Tencent logo is seen at its booth at the 2020 China International Fair for Trade in Services (CIFTIS) in Beijing

SHANGHAI, Aug 3 (Reuters) - China's Tencent Holdings Ltd said on Tuesday it would further curb minors' access to its flagship video game, hours after its shares were battered by a state media article that described online games as "spiritual opium."

Economic Information Daily cited Tencent's "Honor of Kings" in an article in which it said minors were addicted to online games and called for more curbs on the industry. The outlet is affiliated with China's biggest state-run news agency, Xinhua.

The broadside re-ignited investor fears about state intervention after Beijing had already targeted the property, education and technology sectors to curb cost pressures and reassert the primacy of socialism after years of runaway market growth.

"They don’t believe anything is off limit and will react, sometimes overreact, to anything on state media that fits the tech crackdown narrative,” said Ether Yin, partner at Trivium, a Beijing-based consultancy.

China's largest social media and video game firm saw its stock tumble more than 10% in early trade, wiping almost $60 billion from its market capitalisation.

The stock was on track to fall the most in a decade before trimming losses after the article vanished from the outlet's website and WeChat account on Tuesday afternoon. The article later reappeared later in the day with the historically loaded term "spiritual opium" removed and other sections edited. The stock ended down 6.1%.

Shares of European and U.S. gaming companies also took a hit.

Activision Blizzard which has the largest exposure to Chinese markets among its U.S. peers and was due to report after the closing bell, was down 3.8%.

Electronic Arts, the company behind Sims, was down 2.8%. Take-Two Interactive Software, which gave an annual forecast late on Monday that disappointed investors, was down 7.6%.

Shares of Amsterdam-listed Prosus, which holds a 29% stake in Tencent, fell 6.9%, while European online video gaming stocks Ubisoft and Embracer Group fell about 5% and 3.7%, respectively.

In the original article, the newspaper had singled out "Honor of Kings" as the most popular online game among students who, it said, played for up to eight hours a day.

"'Spiritual opium' has grown into an industry worth hundreds of billions," the newspaper said. "No industry, no sport, can be allowed to develop in a way that will destroy a generation."

Opium is a sensitive subject in China, which ceded Hong Kong island to Britain "in perpetuity" in 1842 at the end of the First Opium War, fought over Britain's export of the drug to China where addiction became widespread.

Tencent in a statement said it will introduce more measures to reduce minors' time and money spent on games, starting with "Honor of Kings." It also called for an industry ban on gaming for children under 12 years old.

The company did not address the article in its statement, nor did it respond to a Reuters request for comment.

The article also hit rivals' shares. NetEase Inc dropped more than 15% before paring losses to end down 7.77%. Game developer XD Inc fell 8.1% and mobile gaming company GMGE Technology Group Ltd dropped 13.59%.

Outside of gaming, investors were also caught off guard by the State Administration For Market Regulation (SAMR) on Tuesday saying it would investigate auto chip distributors and punish any hoarding, collusion and price-gouging. The semiconductor stock index subsequently fell more than 6%.

CHILD WELLBEING

The reposted Economic Information Daily article, in a shift of tone, said that authorities, game developers and families had to work together to combat child addiction to online video games, and parents had to be responsible for supervision.

Chinese regulators have since 2017 sought to limit the amount of time minors spend playing video games and companies including Tencent already have anti-addiction systems that they say cap young users' game time.

In practice, it is difficult for companies to stop children accessing games online because users can lie about their age.

But authorities have in recent months placed fresh focus on protecting child wellbeing, and said they want to further strengthen rules around online gaming and education. Last month, they banned for-profit tutoring in core school subjects, attacking China's $120 billion private tutoring sector.

That added to other regulatory action in the technology industry, including a ban on Tencent from exclusive music copyright agreements and a fine for unfair market practices.

At one point on Tuesday, Tencent was briefly de-throned as Asia's most-valuable firm by market capitalisation by chipmaker Taiwan Semiconductor Manufacturing Co Ltd. (Reporting by Samuel Shen and Brenda Goh; Additional reporting by Yingzhi Yang in Beijing, Tom Westbrook in Singapore, Andrew Galbraith and Josh Horwitz in Shanghai and Caroline Valetkevitch in New York; Editing by Vidya Ranganathan, Christopher Cushing and Nick Macfie)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ACTIVISION BLIZZARD, INC. 0.88% 73.735 Delayed Quote.-21.35%
CMGE TECHNOLOGY GROUP LIMITED -1.21% 3.26 End-of-day quote.18.12%
ELECTRONIC ARTS INC. 0.12% 126.97 Delayed Quote.-11.73%
EMBRACER GROUP AB (PUBL) 2.83% 179.4 Delayed Quote.-11.14%
MSCI SINGAPORE (GDTR) 0.63% 6527.826 Real-time Quote.11.46%
NETEASE, INC. 1.78% 81.38 Delayed Quote.-16.52%
PROSUS N.V. 1.00% 69.28 Real-time Quote.-22.70%
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED -2.33% 586 End-of-day quote.10.57%
TAKE-TWO INTERACTIVE SOFTWARE, INC. 0.21% 145.93 Delayed Quote.-28.37%
TENCENT HOLDINGS LIMITED -0.92% 450 End-of-day quote.-20.21%
XD INC. -2.62% 42.75 End-of-day quote.-8.75%
Latest news "Economy & Forex"
11:31aCHINA EVERGRANDE : Wall Street rebounds from recent losses; Fed in focus
RE
11:31aEXCLUSIVE NETWORKS : Announces Successful Initial Public Offering on Euronext Paris
BU
11:27aU.S. EPA mulling cuts to biofuel blending in win for oil industry -document
RE
11:20aFed likely to open bond-buying 'taper' door, but hedge on outlook
RE
11:05aDollar edges lower ahead of Fed, Evergrande exhale lifts risk-sensitive currencies
RE
10:47aStocks rebound as Evergrande jitters ease; dollar slips ahead of Fed
RE
10:43aVERDE SCIENCE : Two more UK energy suppliers stop trading on gas price hit
RE
10:28aBritain tells its food industry to prepare for CO2 price shock
RE
10:28aToronto index eyes best day in two months as commodities rally
RE
10:22aWhite House backs plan for renewable energy industry tax partnerships
RE
Latest news "Economy & Forex"