China Underground > China Finance > Tencent and NetEase shares fell more than 10% after China brands online games ‘electronic drugs’

Tencent and NetEase shares fell more than 10% after China brands online games ‘electronic drugs’

Last Updated on 2021/08/03

China’s two online gaming giants lost over 10% of their value on the Hong Kong stock exchange, before recovering a few points.

Investors are increasingly concerned about the Chinese government’s recent crackdown on hi-tech companies.

In recent months Beijing has strengthened measures to bring the hi-tech and educational services sectors under control.

According to an article published by Economic Information Daily, a Chinese state-run newspaper, many Chinese have become addicted to online games and the sector has a negative influence on young people.

In particular, the article talks about Honor of Kings (王者荣耀), a game produced by Tencent, which is very popular at home. According to the newspaper, young people would lose up to eight hours a day playing video games. The newspaper, therefore, asks the government to intervene to put a brake on this industry that will end up “destroying a generation”. According to Economic Information Daily, online games are a kind of “spiritual opium”.

Tencent said that it has introduced new measures to reduce children’s access to the video game in question. The company added that these measures will be extended to all their games.

The recovery in the stock market of Tencent and NetEase happened only after the removal of the article by Economic Information Daily from their Wechat account, which ironically belongs to Tencent.

Tencent controls 80% of China’s exclusive music streaming rights after an acquisition in 2016.

Last week it was the turn of Chinese online education companies that were targeted after they were deprived of the ability to profit from teaching core subjects in China. The new line guides also introduced new restrictions on foreign investment in the $120 billion industry.

According to authorities, the move was dictated by the need to ease financial pressure on households.

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