By Yifan Wang
Shares of Chinese videogame giants Tencent Holdings Ltd. and NetEase Inc. tumbled on Thursday, after authorities summoned the companies and ordered them to follow new rules for the online-gaming industry.
On Wednesday, China's National Press and Publication Administration, Cyberspace Administration and other regulators told the companies and others to adhere to recent regulations that specify much tighter restrictions over minor gamers' playing time. The regulators also ordered the companies to step up their content control and censorship, and to prevent unfair competition.
Authorities warned of strict oversight and severe punishment if problems are found.
Tencent shed as much as 6.7%, while NetEase's Hong Kong-listed shares lost up to 7.7%.
Video-platform operator Bilibili Inc. and Kuaishou Technology also fell, as both companies derive a substantial portion of their revenues from game-related businesses. Bilibili was recently 6.8% lower and Kuaishou dived 6.3%.
Thursday's steep losses followed a brief recovery in China's technology sector, as cheap valuations and solid second-quarter earnings eased some investor concerns about regulatory uncertainty.
Tencent and NetEase didn't immediately respond to requests for comment.
Beijing has in recent weeks expanded its aggressive regulatory actions, which have hurt the stock performance of Chinese companies from education operators to fintech firms and the online gaming industry.
Last month, a state media report criticized internet games' negative impact on young people, sending shares of major game developers tumbling nearly 10% in one day.
Tencent and NetEase have shed 18% and 20%, respectively, over the past three months.
Write to Yifan Wang at email@example.com
(END) Dow Jones Newswires