"Game for Peace", Tencent's alternative to the blockbuster video game "PlayerUnknown's Battlegrounds" (PUBG) in China, is seen on a mobile phone in this illustration picture taken May 13, 2019. REUTERS/Florence Lo/Illustration/File Photo
SHANGHAI: A slew of smaller Chinese gaming companies have announced share buybacks - plans seen as an attempt to reassure investors after the market was spooked by regulatory moves to clamp down on consumer spending on games.
Last Friday, regulators published draft rules that would ban online games from giving players rewards if they log in every day, if they spend on a game for the first time or if they spend several times on a game consecutively. All are common incentive mechanisms in online games.
That sent shares in gaming companies plunging and as of Monday evening eight companies had unveiled plans to buy back shares worth up to 780 million yuan ($110 million) combined, citing confidence in China's gaming industry and the need to protect investors.
The buyback announcements come on the heels of an apparent softening in stance by China's video game regulator - the National Press and Publication Administration - which released a statement on Saturday saying the government would further improve the proposed rules after "earnestly studying" public views.
And on Monday, it approved new licenses for 105 domestic online games for December - a move that some analysts said "strongly demonstrated" that authorities remain supportive of the development of online games.
The plans for buybacks served at best to stabilise share prices.
Among them, Shanghai-listed G-bits Network Technology Xiamen saw its shares rise 3% by Tuesday afternoon after losing 13% over the previous two trading days. Shenzhen-listed Perfect World Co fell roughly 2% after tumbling 14% over the past two days.
The publication of the draft rules sparked fears that regulators were once again cracking down heavily on the sector. The industry has only just returned to growth this year following the end of an extended clampdown in 2021 and 2022.
It remains to be seen how shares of Tencent Holdings, the world's biggest gaming company and its closest rival, NetEase, will fare this week after the apparent softening in stance from the regulator.
The two Hong Kong-listed firms lost a combined $80 billion in market value on Friday. Hong Kong markets have been shut for the Christmas long weekend and will reopen on Wednesday. - Reuters
