China gaming shares dive after ‘spiritual opium’ warning

Shares of Tencent and other major Chinese gaming companies plummeted Tuesday after a state-run media article described online games as “spiritual opium”.

The criticism triggered fears among investors that online gaming was the next target for China’s communist rulers as they crackdown on Big Tech and other powerful sectors deemed to be out of control.

The Economic Information Daily, an arm of the government’s Xinhua news agency, complained about “widespread” online gaming addiction among children.

“The harmfulness of games has been increasingly recognised by society, and they are often referred to as ‘spiritual opium’ and ‘electronic drugs’,” it said.

The article cited views that “no industry or sport should develop in a way that wrecks a generation”.

Shares in Tencent, one of China’s biggest tech firms that is behind “Honor of Kings” and other global blockbuster games, dived more than 10 percent in Hong Kong shortly after the publication of the article.

Rivals NetEase and XD Inc also tumbled, falling more than 11 percent in Hong Kong.

The fallout spread to Japanese gaming stocks, with shares of online game company Nexon sliding more than 9 percent in Tokyo.

China has stunned investors around the world with a series of crackdowns on tech firms, citing national security, data privacy and monopoly concerns, as well as their impacts on society in general.

E-commerce, education, music streaming and ride-hailing have been some of the sectors targeted, wiping billions of dollars from the share values of companies.

Last month, Tencent’s super app WeChat—which is used for everything from messaging to bill payment—said it was suspending new user registrations until early August for a security upgrade, fuelling concerns over its prospects.

© 2021 AFP