February 7, 2023

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Tencent shares extend three-month rally after China approves new games

Tencent shares extended a three-month rally after Chinese regulators granted new licenses for the tech giant’s games, in the latest sign Beijing is easing its crackdown on the sector.

Shares of the world’s largest video game developer, which has a market value of more than $400 billion, rose more than 2 percent on Thursday, extending a three-month rally of more than 50 percent.

Beijing launched a campaign in 2021 to curb the growing power of the tech industry. She cracked down on ridesharing group Didi Chuxing and others and launched cybersecurity investigations.

The regulatory onslaught has wiped out billions of dollars in market value for the country’s leading tech companies, while mounting geopolitical pressure from Washington has further increased pressure on the sector.

However, the new permits suggest that Beijing may be easing its restrictions on the gaming industry, including caps on underage gaming time and other restrictions to combat the game’s “addiction”.

South Korean titles were also licensed again for the first time in years. Shares of Netmarble, a Seoul-based developer, rose 17 percent on Thursday.

The National Press and Publication Administration said Wednesday that 84 national games were sanctioned in December. Chinese gamers are expected to welcome 44 foreign video games, the first batch since regulators froze import licenses for new games 18 months ago.

Tencent received approvals to publish five imported games, including Nintendo’s Pokémon Unite and Riot Games’ Valorant. The tech giant also won a license for its own game, Synced: Off-Planet.

Tencent announced in November that it would win additional licenses. In September, a Tencent subsidiary received a license for a free educational game. Last month, the company won its first commercial gaming license in 14 months for a sports game called Streetball Allstar.

At a year-end meeting held this month, Tencent’s founder and chief executive Pony Ma warned of tightening regulatory scrutiny of the country’s gaming industry, stressing that the company should use every license it gets and focus on game quality.