China gaming stocks climb on report of regulatory official removed

HONG KONG – Chinese gaming stocks rose on Jan 3 to outperform a weak broader market, after Reuters reported that China removed a gaming regulatory official.

China’s CSI Anime Comic Game Index gained as much as 3.1 per cent in early trading against a 0.3 per cent drop seen in the broader market.

China removed Mr Feng Shixin from a government body overseeing its press and publications regulator, five sources who were briefed on the matter said, days after Chinese gaming stocks were hit by

proposed rules to curb spending on video games.

The removal of the official was a goodwill gesture to the public and demonstrated China’s “stance of maintaining confidence”, said Mr Rukim Kuang, founder of Beijing-based Lens Consulting.

“It is expected that the proposed gaming draft rule will not be implemented in the short term,” he added.

Mr Feng was removed last week from his position as head of the publishing unit of the Communist Party of China’s Publicity Department, the sources said.

The department oversees the National Press and Publication Administration (NPPA), which, in turn, regulates China’s vast video game sector.

The sources said Mr Feng’s removal was linked to rules that the NPPA announced in December that sent stocks in the world’s largest video game sector, including those of industry giant Tencent, plunging.

China’s State Council Information Office, which handles media queries on behalf of the Chinese government, including on personnel matters, did not immediately respond to a request for comment.

The NPPA’s proposed measures, which seek to curb spending and the use of rewards that encourage the playing of video games, triggered fears that the Chinese authorities were once again cracking down heavily on the sector and wiped nearly US$80 billion (S$106 billion) off the market value of Tencent and NetEase, China’s two biggest gaming companies.

Shares in Tencent added 1.35 per cent and NetEase climbed 0.96 per cent on Jan 3, while the Hang Seng benchmark slipped 0.85 per cent.

Analysts also said the plans brought the risks of potential regulatory changes back to the fore in the minds of investors, hurting confidence at a time when Beijing has been trying to boost private-sector investment to spur a slowing economy.

Five days after the rules were announced, the NPPA struck a more conciliatory tone, saying it would improve them by “earnestly studying” public views.

Beijing cracked down heavily on its video gaming sector in 2021.

It set strict playtime limits for those under 18, in addition to suspending approvals of new video games for about eight months, citing concerns over gaming addiction.

The crackdown was part of a wider regulatory tightening across several sectors, including technology and property, and led to 2022 being the Chinese gaming industry’s most difficult year on record as total revenue shrank for the first time.

China’s video game market returned to growth in 2023 as domestic revenue rose 14 per cent to 303 billion yuan (S$55.6 billion), according to the China Game Industry Group Committee, an industry association. REUTERS