Tencent and NetEase Enjoy Boost After Government Resumes New Game Approvals
NetEase Inc. (Nasdaq: NTES), one of the leading game developers in China, surged more than 7 percent in early trading before settling down to $246.16 per share mid-afternoon in New York.
The shares of Chinese game developers all started strong today as Beijing government officials were said to resume approvals for new game titles.
"We are working on the release of new licenses," Feng Shixin, a senior official with the State Administration of Radio and Television, told participants at an industry conference on Friday. "Given the large number of new titles in the pipeline, it might take some time," he said.
In response, NetEase Inc. (Nasdaq: NTES), one of the leading game developers in China, surged more than 7 percent in early trading before settling down to $246.16 per share mid-afternoon in New York.
The announcement came as state officials licensed no new games since late March while the state organiziation underwent a restructuring. Moreover, China's Ministry of Education, in a notice in August, directed the publishing regulator to limit the number of new online video games, take steps to restrict the time young people spend playing games, and explore an age-appropriate system for players.
Beijing's directive was included in a document published on the website of the ministry outlining how China should respond to worsening rates of myopia, or near-sightedness, among young people, and blamed the spread of mobile phones and other electronic devices partly for it.
The curbs posted big challenges for China's top two game developers - Tencent and NetEase. Shares of Tencent Holdings Ltd.'s (HKEX: 0700), which had a market value of around HK$3.25 trillion ($414.12 billion) as of Aug 31, slumped as much as 20 percent over the past three months. But after Friday's remark, the stock jumped more than 4 percent to close at HK$315.2 per share in Hong Kong on Friday.