a series of small Chinese companies in the gaming sector have announced share buybacks, plans seen as an attempt to reassure investors after the market will be spooked by regulatory measures to curb consumer spending on games.
Last Friday, regulators released draft rules that would prohibit online games give players rewards if they log in every day, spend on a game for the first time, or spend multiple times on a game game consecutively. All of them are common incentive mechanisms in the online games.
That made the actions of the gaming companies collapse, and as of Monday afternoon, eight companies had unveiled plans to buy back shares worth up to 780 million yuan ($110 million) combined, citing confidence in the Chinese gaming industry and the need to protect to investors.
The buyback announcements come after an apparent softening of the stance of the regulatory body of the video games in China -the National Press and Publication Administration-, which issued a statement on Saturday stating that the government would continue to improve the proposed standards after “study seriously” the opinions of the public.
And on Monday, it approved new licenses for 105 online games nationals for December, a measure that, according to some analysts, “clearly demonstrates“that the authorities continue to support the development of the online games.
Buyback plans served, at best, to stabilize stock prices.
Among them, Shanghai-listed G-bits Network Technology Xiamen saw its shares rise 3% on Tuesday afternoon after losing 13% in the previous two trading days. Shenzhen-listed Perfect World Co fell about 2% after plunging 14% in the past two days.
The publication of the draft rules raised fears that regulators would crack down again on the sector. The industry has barely returned to growth this year after the end of a prolonged crackdown in 2021 and 2022.
It remains to be seen how shares of Tencent Holdings, the largest gaming company in the world, and its closest rival, NetEase, following the regulator’s apparent softening of its stance.
The two Hong Kong-listed companies lost a combined market value of $80 billion on Friday. The markets of Hong Kong They have remained closed for the Christmas long weekend and will reopen on Wednesday. ($1 = 7.1422 Chinese yuan) (Reporting by Casey Hall and Li Gu; Editing by Edwina Gibbs)
With information from Reuters
Source: Gestion
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