Tencent shares crash after new gaming regulations in China

Core Viewpoint - The recent draft guidelines from the Beijing government aim to limit incentives that lead to excessive gaming and spending, resulting in significant stock declines for Tencent and NetEase [1][2]. Group 1: Market Reaction - Tencent's shares fell by up to 15.7%, reaching HK$263.60 ($33.74), before slightly recovering to a decline of approximately 12.7% at HK$274 ($35.07), marking its lowest level since late November 2023 [2]. - NetEase's stock experienced a sharper decline of 20% following the announcement of the new regulations [2]. Group 2: Regulatory Context - The National Press and Publication Administration's draft guidelines prohibit online game operators from using inducive rewards, which are believed to encourage consumers to spend more time and money on games [1]. - This regulatory move is part of a broader trend of ongoing measures targeting online gaming in China, reflecting authorities' concerns about video game addiction among youth [1].