10% Dip for Tencent Shares After Game Dubbed as “Spiritual Opium”

In China, video games have been likened to electronic drugs causing stocks of major game developers to tumble. A recent article from Economic Information Daily singled out “Honor of Kings” as it called for more control over online gaming.

This recent claim has sparked fear among investors, particularly around China’s state intervention. Property, education and technology were the most recently targeted sectors of the state’s reassertion of socialism which effectively impeded years of market growth.

“They don’t believe anything is off limit and will react, sometimes overreact, to anything on state media that fits the tech crackdown narrative,” explained Ether Yin, a partner at Beijing-based consultancy Trivium.

“Honor of Kings” is a game from Tencent Holdings Ltd. which was name-dropped since its the most popular game among students. Some have been observed to spend 8 hours a day playing it.

After the game was mentioned in the article, the Chinese social media and video game giant’s stocks declined by more than 10% amounting to a loss of approximately $60 million from its market capitalization.

Fortunately, the decline was halted after the article was removed from the publisher’s website and other platforms. “‘Spiritual opium’ has grown into an industry worth hundreds of billions,” the article expressed, pertaining to video games. “No industry, no sport, can be allowed to develop in a way that will destroy a generation.”

In response, Tencent has assured that it will strive to implement more measures to significantly reduce the time and money minors spend on games. It has likewise called for a gaming ban for children under 12 years old.

Source: Reuters