Europe’s video game stocks fell on Thursday and U.S. peers looked set to follow after a reported suspension of approvals for new online games in China, the world’s No.1 gaming market.
People with knowledge of the matter told the South China Morning Post that Beijing had temporarily suspended approval for all new online video games in a bid to curb the gaming addiction among young people.
“It’s not good news, period. The last gaming approval ‘temporary’ suspension lasted nine months. It impacted the whole sector in terms of growth and valuation compression of stocks,” said Neil Campling, London-based head of technology, media and telecoms research at Mirabaud.
Shares in France’s Ubisoft fell 2 per cent while Prosus, which holds nearly 29 per cent of Chinese tech and gaming giant Tencent, fell more than 6 per cent in Amsterdam. Ebracer fell 4 per cent and Rovio was down more than 2 per cent.
Beijing last month moved to ban under-18s from playing video games for more than three hours a week, and on Wednesday government officials summoned gaming firms including Tencent and NetEase to ensure they implemented the new rules.
The fresh push by Chinese regulators whacked the share prices of Tencent and NetEase, which fell more than 8 per cent and 13 per cent respectively on Thursday, dragging the Hong Kong tech index to its biggest fall since the end of July.
While most of the U.S. and European companies don’t break out their exposure to China, investors are concerned about the business outlook in a country crucial to their growth plans.
“Electronic Art had talked about the opportunity for Apex Mobile in China next year, Roblox has talked about China as a major growth engine going forward, and Ubisoft has been working with Tencent to get approval for The Division 2,” said Mirabaud’s Campling.
“The story is more about future approvals, opportunities and growth and this is where the risk is higher.”
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