Chinese gaming firms unveil share buybacks after regulatory move unnerves investors
A slew of smaller Chinese gaming companies have announced share buybacks - plans seen asan attempt to reassure investors after the market was spooked byregulatory moves to clamp down on consumer spending on games.
Last Friday, regulators published draft rules that would banonline games from giving players rewards if they log in everyday, if they spend on a game for the first time or if they spendseveral times on a game consecutively. All are common incentive mechanisms in online games.
That sent shares in gaming companies plunging and as ofMonday evening eight companies had unveiled plans to buy backshares worth up to 780 million yuan ($110 million) combined,citing confidence in China's gaming industry and the need toprotect investors.
The buyback announcements come on the heels of an apparentsoftening in stance by China's video game regulator - theNational Press and Publication Administration - which released astatement on Saturday saying the government would furtherimprove the proposed rules after "earnestly studying" publicviews.
And on Monday, it approved new licenses for 105 domesticonline games for December - a move that some analysts said"strongly demonstrated" that authorities remain supportive ofthe development of online games.
The plans for buybacks served at best to stabilise shareprices.
Among them, Shanghai-listed G-bits Network Technology Xiamensaw its shares rise 3% by Tuesday afternoon afterlosing 13% over the previous two trading days. Shenzhen-listedPerfect World Co fell roughly 2% after tumbling 14%over the past two days.
The publication of the draft rules sparked fears thatregulators were once again cracking down heavily on the sector.The industry has only just returned to growth this yearfollowing 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 closestrival, NetEase, will fare this week after the apparentsoftening in stance from the regulator.
The two Hong Kong-listed firms lost a combined $80 billionin market value on Friday. Hong Kong markets have been shut forthe Christmas long weekend and will reopen on Wednesday.($1 = 7.1422 Chinese yuan)(Reporting by Casey Hall and Li Gu; Editing by Edwina Gibbs)