Wednesday, February 1, 2023
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Tencent Shares Drop After China Media Criticizes Video Games

Shares of Tencent Holdings and other prominent Chinese video-game companies plunged in Hong Kong trading on Tuesday after a Beijing-affiliated media outlet called their products “spiritual opium.”

The blast from the state-affiliated media outlet, the Economic Information Daily, came after months of increased pressure from Beijing aimed at the broader Chinese internet industry, which serves one billion users. That pressure has moved global investors to pull billions of dollars out of Chinese technology stocks, on fears that tighter regulation could hurt company prospects.

The article from the Economic Information Daily did not declare that any specific policy changes would be made, and it was unclear whether it reflected the views of Beijing officials or merely those of the publication’s editors.

Further adding to the uncertainty, the link to the article went dead later on Tuesday, though a copy could still be found on the site of Xinhua, the official state news agency, which controls the Economic Information Daily.

Despite the uncertainty, nervous investors were quick to sell shares.

Tencent, a technology conglomerate with a big presence in social media and entertainment in addition to video games, saw its shares drop about 10 percent at one point, though the losses moderated later on Tuesday and ended down about 7 percent. NetEase, another mainland video game company, saw its shares drop nearly 9 percent.

The article’s headline — “A ‘spiritual opium’ has grown into an industry worth hundreds of billions of dollars” — left little doubt at the thrust of the piece. It cited a litany of threats posed by video games, including diverting attention from school and family and causing nearsightedness.

“No industry or sport should develop at the price of destroying a generation,” it said.

The article singled out Tencent, which owns games popular in China like Honor of Kings as well as titles popular around the world, like League of Legends.

Tencent on Tuesday released a statement on its WeChat social media network describing some of the limits it recently decided to put into place, like limiting game time for minors and increased efforts to ferret out those who lie about their age to play.

The scrutiny isn’t new to Tencent or the industry. More than half of Chinese internet users play online games, according to government statistics. In the past, officials have worried that games could hurt children’s academics, damage their eyesight and reduce the country’s military readiness. In 2019, the authorities limited the amount of time young people could spend playing games online.

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