Gaming Stocks Advance as China's Government Prepares to Issue New Licenses
Liao Shumin
/SOURCE : yicai
Gaming Stocks Advance as China's Government Prepares to Issue New Licenses

(Yicai Global) Dec. 21 -- Shares of Tencent Holdings and other Chinese game makers gained today after the government said it would soon issue publication licenses for a batch of new games that have passed review, ending a nine-month hiatus that has dragged on developers.

The Hong Kong-traded stock of Tencent Holdings [HKG:0700], the world's biggest gaming company, closed 4.5 percent higher at HKD315.20 (USD40.26) after earlier falling 1 percent. Mainland listed developers such as ZQgame [SHE:300052] and Youzu Interactive [SHE:002174] surged by the daily trading limit of 10 percent.

The country's game makers have faced unprecedented challenges after authorities stopped approving new titles in late March, stymying the sector. Forty-two percent of listed developers saw net profit decline in the first three quarters. Regulators said they were reacting to concerns about violence in video games and addictive behavior.

The review of some titles is still pending, however, Jiemian News reported, citing comments made by Feng Shixin, deputy director of the Publications Department of China's Central Propaganda Department. Feng was speaking at the 2018 China Game Industry Annual Conference.

Game products have a certain lifecycle, and new ones are important to supplement older ones. But new titles cannot be commercialized without publication licenses, hurting developers' profits. Investments have been hit due to the low market valuation of mainland players, slower growth in the sector and unclear expectations of policy changes, according to a research report released by China Securities International.

Feng also said that measures will be introduced to strictly regulate the industry and ensure teenagers don't get addicted to games. Specific norms will be formulated to crack outstanding problems such as excessive profit-seeking, plagiarism and consumer fraud in the industry, explore the establishment of credit files and strictly regulate competition, tech media 36kr reported.

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Keywords: Game