Tencent shares drop the most in 10 years amid fears of repression | Business and Economics News | World Weekly
Chinese state media have described online video games as a “spiritual opium”, sending shares of Tencent and other gaming companies tumbling.
Shares of Tencent Holdings Ltd were on track to fall by their most in 10 years on Tuesday after a Chinese state media brand described online video games as the “spiritual opium”, raising concern that the sector might be next in line for regulators.
China’s largest social media and video game company saw its shares drop more than 10 percent in morning trading, wiping out nearly $60 billion from its market capitalization.
Shares of rival NetEase fell 15.7 percent, while shares of game developer XD Inc and mobile game company GMGE Technology Group Ltd. fell.
Many teens are addicted to online video games, the government’s Economic Information Daily said in an article on Tuesday and called for more restrictions on the industry. The outlet is affiliated with China’s largest state-run news agency, Xinhua.
The newspaper repeatedly cited Tencent’s flagship game, Honor of Kings, which it said is the most popular online game among students who sometimes play for up to eight hours a day.
“No industry or sport can be allowed to develop in a way that destroys a generation,” the paper said, likening online video games to “electronic drugs.”
Tencent did not respond to a Reuters request for comment.
The government has pledged to strengthen rules around gaming and online education to protect children’s welfare. Last month, it banned for-profit teaching in core subjects, a move that threatens to devastate China’s $120 billion private teaching sector.
In online video games, authorities have sought to limit the hours that teens can play, and companies including Tencent have implemented anti-addiction systems that they say limit the playing time of young users.
The Economic Information Daily, citing legal experts and professors, said current restrictions have not been able to keep pace with the development of the sector to prevent youth addiction, and that there must be more “mandatory means” to increase the social responsibility of video game companies.
Tencent has already been under pressure alongside its big tech peers due to increased regulatory action on online platforms. Last month, he was denied exclusive music copyright agreements and fined for unfair market practices.