What’s up With China’s Gaming Curbs?

A recent meeting between the authorities and game platforms caused panic in the markets. There’s more to it.     

Kate Lin, CAIA 14.09.2021
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The Chinese government is still worried about video games. Back on August 3, state-affiliated media in China said that playing online games is addictive and went so far as to call online games ‘spiritual opium’. As a result, children under the age of 18 under playing video games on Chinese servers were restricted to three hours of gaming per week.  

There is a workaround, though. State-owned CCTV reported that, for Tencent (00700)’s blockbuster game Honor of Kings, users can pay a rate of CNY 33 per two hours to rent accounts and get around the restriction. Subsequently, game developers like Tencent and NetEase (09999) were summoned for a talk with the state officials. The talk weighed on the market’s ailing confidence in Chinese stocks. Chelsey Tam, senior equity analyst at Morningstar, says there’s more to glean from the talk than mere hour limits. “To us, most notable during the discussions are new requirements around antimarket concentration, strengthening controls of in-app purchases, and game designs that induce addiction.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
CMGE Technology Group Ltd3.28 HKD-1.50Rating
NetEase Inc Ordinary Shares176.20 HKD4.51Rating
Tencent Holdings Ltd470.60 HKD2.44Rating

About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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