Shares of leading gaming companies plummeted in Hong Kong following Beijing’s release of draft regulations aiming to curb excessive spending by players, Nikkei Asia reports.
Tencent Holdings, China’s largest gaming company, witnessed a staggering $46 billion wiped off its market capitalization.
The draft rules, issued by China’s gaming regulator, the National Press and Publication Administration, mandate all online games to enforce spending limits for users recharging their accounts.
Additionally, pop-up alerts must warn against “irrational spending.” Moreover, game publishers must host their technical infrastructure within China.
Moreover, inducements such as daily login rewards, first-time recharge rewards, and high-priced virtual item transactions’ promotion will be prohibited.
The aftermath was severe, with Tencent’s shares dropping over 12%, and its competitor NetEase facing a more substantial plunge of over 24%, resulting in a $16.4 billion decrease in its market capitalization.
This decline heavily impacted the benchmark Hang Seng index, down by 1.69%.
(Image: Associated Press)
Executives from gaming firms expressed concerns over the potential restrictions on recharging accounts, particularly uncertain whether these rules exclusively target minors or extend to adult users.
Back in July 2021, China abruptly suspended game approvals, resuming them in April 2022 after an eight-month freeze, during which Tencent and NetEase saw no approvals until August of the same year.
As the draft regulations invite public feedback until Jan. 22, industry insiders are wary of their potential impacts, especially with the upcoming winter holidays for Chinese students.
