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Chinese gaming stocks, including Tencent (OTCPK:TCEHY) (OTCPK:TCTZF) and NetEase (NASDAQ:NTES), rose on Wednesday following a news report that China removed a gaming regulatory official.
Tencent’s stock rose about +1.35% to HK$300.60, on the Hong Kong Stock Exchange, while rival NetEase climbed about 2% premarket on Nasdaq, while Bilibili’s (BILI) shares were up about 1% premarket.
Last week, China removed Feng Shixin from his position as head of the publishing unit of the Communist Party’s Publicity Department, Reuters reported citing people with knowledge of the matter.
The department oversees the National Press and Publication Administration, or NPPA, which regulates China’s video games sector.
In December 2023, the NPPA announced new draft rules for online gaming industry aimed at curbing the amount of money and time players spend playing the games. The new rules set panic among investors and led to a wipe out of about $80B in market value from the three Chinese companies (Tencent, NetEase and Bilibili) on the Hong Kong and China exchanges.
Last week, the stocks showed signs of recovery after Beijing vowed to make improvements to the draft rules, noting that the government would further improve the proposed draft rules after “earnestly studying” public views.
As per the draft, online games would not be allowed to set inductive rewards such as daily login, first-time recharge, and continuous recharge. Pop-up warnings should be issued to users for irrational consumption behavior. The rules also include caps on the amount each player can spend within a game, among other things.
Other Chinese stocks: Weibo (WB) about 1%, Alibaba (BABA) and Baidu (BIDU) largely flat premarket on Wednesday on Nasdaq. Kuaishou Technology (OTCPK:KUASF) (OTCPK:KSHTY) was also largely stable on the Hong Kong exchange.