Game Stocks Rise as Chinese Government Set to Issue New Licenses

LIAO SHUMIN

(Yicai Global) Dec. 21 — The government has completed reviewing China’s new batch of games, and publication licenses will be issued to the operators soon. However, Feng Shixin, deputy director of the Publications Department of China’s Central Propaganda Department, said that reviews of some games were still pending, according to a report by online site Jiemian News.

Feng was speaking at the 2018 China Game Industry Annual Conference.

The Hong Kong stocks of Tencent Holdings [HKG:0700] rallied from a drop of 1 percent to rise 4 percent by 10:40 AM on the news. It was valued HKD313 (USD40) per share. Stocks of many A-share listed game developers such as ZQgame [SHE:300052] and Youzu Interactive [SHE:002174] rose above their daily upper limits.

China’s gaming industry is being strictly supervised this year. No licenses have been issued since March this year. 42 percent of Chinese-listed game firms saw a net profit decline in the first three quarters.

Game products have a certain lifecycle, and new games are important to supplement the old ones. New games cannot be commercialized without publication licenses, hurting the developers’ profits. Investments have been hit due to the low valuation of the A-share game sector, slower growth of the industry and unclear expectations of policy changes, according to a research report released by China Securities (International).

Feng also said that measures will be introduced to strictly regulate the industry and ensure teenagers don’t get addicted to the games. Specific norms will be formulated to crack outstanding problems such as excessive profit-seeking, plagiarism and consumer fraud in the industry, explore the establishment of credit files and strictly regulate the competition, tech media 36kr reported.