China Business and Finance Update
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After state media criticized online games as “spiritual opium,” the share prices of Tencent and other Chinese video game companies fell by more than 10%. This is Beijing’s latest attack on the Chinese technology group.
An article in the “Economic Information Daily” of the state news agency Xinhua stated that online video games have grown into “a spiritual opium worth hundreds of billions.” An expert warned that “no industry… can destroy a generation. develop”.
The decline follows the decline in Chinese technology stocks Worst month Since the global financial crisis in July, unprecedented Regulatory campaign Oppose technology industries such as education, online ride-hailing, and social media.
The article did not name Tencent, but complaints are common addicted to Internet Among Chinese youth. Citing students who asked not to be named, some of their classmates spend up to eight hours a day on the flagship of the Internet Group. King of Glory Games, and warned that this “new electronic drug” is “advancing by leaps and bounds.”
A long history of comparison, comparing Chinese video game manufacturers to Foreign opium dealer Its trade contributed to the disintegration of the Chinese empire, and shares of some of the country’s largest technology groups fell sharply on Tuesday.
Tencent’s shares, its online Game business In the first quarter, 39.1 billion yuan (US$6 billion) was generated, which accounted for 30% of total revenue, which was down 10.1% in Hong Kong. Competitors NetEase and XD fell about 13% and 14% respectively. According to data from research firm and consulting firm Niko Partners, China’s video game market is worth US$43.1 billion in 2020.
The official media’s renewed attack on the Chinese technology conglomerate weighed on the Shanghai and Shenzhen stocks.These have Stabilized In recent days, during a conference call held by the China Securities Regulatory Commission Trying to appease Global and domestic financial groups have expressed dissatisfaction with Beijing’s relentless suppression of the industry.
In recent weeks, Beijing has called for the establishment of new Overseas listing system, Conducted a data security review on companies seeking to sell shares overseas, and declared the country’s $100 billion in assets illegal Private education industry Earn profits from. According to JPMorgan Chase analysts, this makes the three major companies in the industry “almost impossible to invest.”
Articles in the official media signaled that Tencent faces new challenges. Tencent controls the country’s ubiquitous WeChat social network and payment application, and only recently withstood regulatory shocks. Relatively unscathed.
This suddenly changed last week when the company announced Stop all user registration Upgraded its security technology for WeChat to “compliance with all relevant laws and regulations.” In the past month, Tencent’s stock price has fallen by more than a quarter.
“Because of the crackdowns we have seen recently, the timing of this article must have caused investors’ concerns. [on Chinese tech],” said Daniel Ahmad, senior analyst at Niko Partners.
But he added that this is not the first time China has compared games to drugs. The publication of this article also follows the new rules that came into effect on June 1, requiring the company to verify the age and identity of each player in order to limit the time that minors can play the game.
“This [article] More important is a critical review of the loopholes in the current regulatory system,” Ahmed said.
Faced with stringent education industry regulations, China’s leading tutoring company New Oriental Education also cancelled its fourth-quarter financial report released on Tuesday.
Like almost all Chinese companies listed in the United States, New Oriental is classified as Foreign private issuerCompared with domestic companies, this provides them with a more relaxed disclosure system.
These Chinese companies do not need to disclose quarterly earnings technically, but only need to publish annual reports.
Additional reporting by Ryan McMorrow in Beijing