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    Home»Sections»Investment»Naspers battered as ‘spiritual opium’ article spooks investors

    Naspers battered as ‘spiritual opium’ article spooks investors

    Investment By Agency Staff3 August 2021
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    Shares in both Naspers and its European spinoff Prosus tumbled on Tuesday, following Tencent’s sharp fall after a Chinese state media article described online videogames as “spiritual opium”.

    Tencent said on Tuesday it would curb minors’ access to its flagship videogame, hours after its shares were knocked lower by the state media article.

    Both Naspers, which is listed on the JSE, and Prosus, listed in Amsterdam, were trading down about 5% at around 11am South African time.

    Economic Information Daily cited Tencent’s Honour of Kings in an article in which it said minors were addicted to online games…

    Economic Information Daily cited Tencent’s Honour of Kings in an article in which it said minors were addicted to online games and called for more curbs on the industry. The outlet is affiliated with China’s biggest state-run news agency, Xinhua.

    China’s largest social media and videogame firm saw its stock tumble more than 10% in early trade, wiping almost US$60-billion from its market capitalisation. The stock was on track to fall the most in a decade before trimming losses after the article vanished from the outlet’s website and WeChat account.

    Broadside

    The broadside comes days after the securities regulator and state media sought to soothe investor fears over the pace and breadth of market reform that sparked a selloff in technology and private education. The CSI300 index last week fell more than 5% for its biggest monthly loss since October 2018.

    The attack on the videogame sector put investors back on edge. “News once again caused market concerns about industry regulation,” said Everbright Sun Hung Kai analyst Kenny Ng. “Under this circumstance, it is expected that game stocks and even the overall technology stocks will still face continuous adjustment pressure,” he said, adding focus will shift to whether firms change their policies for minors’ access.

    In the article, the newspaper singled out Honour of Kings as the most popular online game among students who, it said, played for up to eight hours a day. “No industry, no sport, can be allowed to develop in a way that will destroy a generation,” the newspaper said, likening online videogames to “electronic drugs”.

    Tencent in a statement said it will introduce measures to reduce minors’ access to and time spent on games. It also called for an industry ban on gaming for children under 12 years old. The company did not address the article in its statement, nor did it respond to a request for comment.

    A separate opinion piece published by the China News Service on its official Twitter-like Weibo account hours after the Economic Information Daily article took a different tone, saying that blame could not be placed on any one party, including game developers, for child addiction to online videogames.

    “Schools, game developers, parents and other parties need to work together,” said the news outlet, which is also state-run.

    Tencent was briefly de-throned as Asia’s most-valuable firm by market capitalisation by chip-maker TSMC of Taiwan

    Chinese regulators have since 2017 sought to limit the amount of time minors spend playing videogames and companies including Tencent already have anti-addiction systems that they say cap young users’ game time.

    But authorities have in recent months focused on protecting child wellbeing, and said they want to further strengthen rules around online gaming and education. Last month, they banned for-profit tutoring in core school subjects, attacking China’s $120-billion private tutoring sector.

    Dethroned

    That added to other regulatory action in the technology industry, including a ban on Tencent from exclusive music copyright agreements and a fine for unfair market practices.

    At one point on Tuesday, Tencent was briefly dethroned as Asia’s most-valuable firm by market capitalisation by chip-maker TSMC of Taiwan.

    “It showed how investors are jumpy these days. They don’t believe anything is off limit and will react, sometimes overreact, to anything on state media that fits the tech crackdown narrative,” said Ether Yin, partner at Beijing-based consultancy Trivium. “Government will not and cannot get rid of the gaming industry… Restrictions will stay but not much room to go tighter.”  — Reported by Samuel Shen and Brenda Goh, with additional reporting by Yingzhi Yang, Tom Westbrook, Andrew Galbraith and Josh Horwitz, (c) 2021 Reuters, with additional reporting (c) 2021 NewsCentral Media

    Naspers Prosus Tencent top TSMC
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