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

Tencent shares extended a three-month rally after Chinese regulators granted new licences for games made by the technology group marking the latest sign that Beijing was easing its crackdown on the sector.

Shares of the world’s largest video game developer, which has a market value of more than $400bn, closed 2.8 per cent higher on Thursday, extending a three-month rally of more than 50 per cent.

Beijing launched a campaign in 2021 to rein in the technology industry’s growing power. It cracked down on ride-sharing group Didi Chuxing and others, launching cyber security investigations.

The regulatory assault has wiped off billions worth of market value from the country’s leading tech companies, while growing geopolitical pressure from Washington has further added pressure on the sector.

But the new approvals suggest that Beijing may be relaxing its restrictions on the gaming industry, which included capping playing time for minors and other curbs to address gaming “addiction”.

South Korea titles were also granted licences for the first time in years. Shares of Netmarble, a Seoul-based developer, closed 17 per cent higher on Thursday.

The National Press and Publication Administration on Wednesday said 84 domestic games were approved in December. Chinese players are set to welcome 44 foreign video games, the first batch since regulators froze new game import approvals 18 months ago.

Tencent won approvals to publish five imported games, including Pokémon Unite by Nintendo and Valorant by Riot Games. The tech group also won a licence for its own game Synced: Off-Planet.

Tencent had flagged in November that it had expected to win more licences. In September, a subsidiary of Tencent received a licence for a free educational game. Last month, the company won its first commercial game licence, for a sports game called Streetball Allstar, in 14 months.

At a year-end meeting held this month, Tencent’s founder and chief executive Pony Ma warned against heightened regulatory scrutiny of the country’s gaming industry and stressed that the company should take advantage of every licence it has obtained and focus on the quality of games.