Chinese gaming stocks regain some ground as Beijing softens rhetoric

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Chinese gaming stocks regained some ground on Wednesday after Beijing appeared to soften its rhetoric on the sector in the wake of new regulations for the world’s biggest gaming market that triggered a record sell-off last week.

Shares in Tencent had tumbled more than 12 per cent on Friday after regulators rocked markets with a plan to curb how much money and time adults spend while playing online games — a reminder to investors of the risks from unpredictable policies in the world’s second-biggest economy.

But they clawed back some of those losses, rising more than 5 per cent in Hong Kong on Wednesday, in their first trading session after official rhetoric appeared to soften Beijing’s stance. Rival NetEase rose about 10 per cent after closing the previous session down almost a quarter. 

After Friday’s rout, the National Press and Publication Administration, China’s gaming regulator, sought to assuage concerns, approving the release of a batch of new games and stating on Saturday that it would study responses to its plans to curb how gaming is monetised, and support “healthy development” of the industry.

Zhang Xueqing, an analyst from China International Capital Corporation, a leading Chinese brokerage, said the regulator’s statement should “soothe the concerns of capital markets” and showed a more “gentle” attitude on the part of Beijing.

However, analysts and fund managers said the weak recovery highlighted concerns about policy uncertainty in China.

Liqian Ren, who manages China investments at WisdomTree Asset Management, a US-based fund, said that many China-focused investors had concentrated on macro trends in housing and consumption, and had taken “on this narrative” that regulatory risk for tech platforms had subsided. In this context, Friday’s announcement had been a big shock.

“People are definitely…