Tencent woes in China pressure European gaming stocks
LONDON, Aug 3 (Reuters) – Shares in Europe’s gaming companies fell on Tuesday following a drop in China’s social media and video games giant Tencent on fears that the gaming sector may be next in Chinese regulators’ crosshairs.
Shares in Amsterdam-listed tech investment firm Prosus fell more than 5% following Tencent’s tumble. Prosus holds a 29% stake in the Chinese group.
Other European online video gaming stocks including Paris-listed Ubisoft, Sweden’s Evolution AB and Embracer Group all fell between 1.5 and 3%.
China’s largest social media and video game firm saw its stock tumble more than 10% in early trade, wiping almost $60 billion from its market capitalisation, after the Chinese state media outlet branded online video games “spiritual opium”.
The article by Economic Information Daily cited Tencent’s “Honor of Kings”, saying minors were addicted to online games and called for more curbs on the industry. The outlet is affiliated with China’s biggest state-run news agency, Xinhua.
Equita analyst Gianmarco Bonacina downgraded Prosus from buy to hold, saying that he saw Tencent hit by increasing regulatory risks on gaming, after those introduced on fintech, e-commerce and educational technology.
“We believe that the risk of a restrictive regulation also on gaming is now more concrete and this could imply both a restriction in the number of new titles allowed and, in the worst case, the total or partial prohibition of monetization through in-game items”, he said in a note.
At one point on Tuesday, Tencent was briefly de-throned as Asia’s most-valuable company by market capitalisation by chipmaker Taiwan Semiconductor Manufacturing Co Ltd. (Reporting by Joice Alves, editing by Louise Heavens)