Another stock market strike on China’s Tencent after allegations of creating “spiritual opium” – World

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China’s Tencent Holdings Ltd said on Tuesday it would further restrict the access of minors to its flagship video game, hours after its shares were hit by an article in state media that described online games as “spiritual opium.”

The Economic Information Daily specifically mentioned Tencent’s “Honor of the Kings” in an article saying that minors are addicted to online gaming, and called for more restrictions on the sector. The publication is affiliated with Xinhua, China’s largest state-run news agency.

The massive attack has rekindled investors’ fears of state intervention in China, as Beijing has already turned to sectors such as real estate, education and technology to curb spending pressures and reaffirm the supremacy of socialism after years of accelerated market growth. “.

“They don’t believe there are untouchable sectors, and they will react – sometimes too much – to anything in the state media that fits into the context of pressure on technology companies,” said Ether Yin, a partner at Trivium, a Beijing-based consulting firm.

China’s largest social media and video game company saw its shares fall by more than 10% at the beginning of trading. That wiped out nearly $ 60 billion of its capitalization. Shares were on the verge of falling the most in the last decade, but then the losses were offset after the article disappeared from the publication’s website and its WeChat account.

The CSI300 index fell more than 5% last week, registering its biggest monthly loss since October 2018.

In the article, the newspaper lists “Honor of the Kings” as the most popular online game among students, who according to the text play up to eight hours a day.

“Spiritual opium” has grown into an industry worth hundreds of billions, the newspaper said. (…) No industry, no sport can be allowed to develop in a way that will destroy a generation. ”

Talking about “opium” was a delicate topic in China after Hong Kong was ceded to Britain “forever” in 1842 at the end of the First Opium War, to control drug imports for the country, where addiction became widespread.

Tencent has said it will introduce more measures to reduce the time and money minors spend on games, starting with Honor of Kings.

The holding called for a ban on the games industry for children under 12.

The company did not comment on the article in its statement, nor did it respond to a Reuters question for comment.

The article also hit the shares of rivals. NetEase Inc fell more than 15% before offsetting losses to end with a decline of about 8%. Game developer XD Inc fell by 8.2% and mobile game company GMGE Technology Group Ltd – by 15.6%.

A separate comment was posted by China News Service on its official Weibo profile hours after the Economic Information Daily article used a different tone, saying no country, including game developers, could be blamed for children’s addiction to online video games. .

“Schools, game developers, parents and other countries need to work together,” the state-run news channel said.

Chinese regulators since 2017 have sought to limit the time minors spend playing video games, and companies, including Tencent, already have anti-addiction systems that they say limit the playing time of young users.

But in recent months, authorities have placed new emphasis on protecting children’s well-being and said they want to further strengthen rules on online games and education. Last month, they banned the teaching of commercial subjects in basic school subjects, attacking the private sector of teachers in China for $ 120 billion.

This added to other regulatory actions in the technology industry, including a ban on Tencent from concluding exclusive music copyright agreements, as well as a fine for unfair market practices.

Last week, the holding’s popular instant messaging service, WeChat, suspended registration of new users in China. The explanation was that this was done for technological renewal “in order to comply with laws and regulations.” Registrations were expected to resume in early August, but that was enough to bring down Tencent’s share price in Hong Kong by 9%.

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