(Bloomberg) — China\u2019s raft of new measures limiting players\u2019 spending on video games sent ripples through stock markets across the globe on Friday.
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Prosus NV fell as much as 20% in Amsterdam trading, erasing \u20ac15.5 billion ($17.1 billion) of market value at one point, after the regulator\u2019s draft rules dealt a blow to the value of the company\u2019s holding in Chinese internet giant Tencent Holdings Ltd. South African parent Naspers Ltd. also slumped by a fifth.
In Hong Kong, Tencent \u2014 in which Prosus holds a 25% stake \u2014 closed down 12%. In New York, the Nasdaq Golden Dragon China Index of US-listed Chinese stocks declined 2.4%, with video-game maker NetEase Inc. leading losses.
Ubisoft Entertainment SA, which Tencent invests in, fell as much as 8.3% in Paris trading, while US peer Unity Software Inc. also declined.
China\u2019s gaming regulator on Friday published draft rules aimed at clamping down on practices that encourage players to spend more money or time in online games. A sweeping set of curbs on in-game rewards for frequent log-ins and purchases stoked fears of another industry crackdown in the world\u2019s biggest mobile gaming arena.
The Chinese regulator will consider adjusting the draft rules based on feedback from relevant government departments, companies and users, state-owned China Press Publication Radio Film and Television Journal reported Saturday, without giving more details.
Prosus\u2019s share-price slump shows that it\u2019s sensitive to factors outside of its influence, according to Bloomberg Intelligence analyst John Davies. Its Tencent stake \u201ccasts a shadow over its other investments, and appears unlikely to change soon,\u201d he said.
Prosus\u2019s stock performance is closely linked to that of Tencent, given that three-quarters of its sum-of-the-parts value lies within the Chinese conglomerate. The Dutch firm counts on Tencent as its biggest investment in a wide-ranging portfolio of technology stocks.
Prosus has been trimming its investment in Tencent for more than a year to fund a buyback program. The company said earlier this month that its ownership dropped below 25%.
In Johannesburg, local benchmark the FTSE\/JSE Africa All Shares Index declined as much as 1.8%, with Naspers and Prosus the biggest drags on the market.
Meanwhile, for Chinese equities, this year\u2019s underperformance has turned from bad to worse. Friday\u2019s decline deepens the Golden Dragon Index\u2019s 2023 drop to about 8%, well behind the Nasdaq 100\u2019s 54% gain.
\u201cIn a way it is a fitting end for a year that has severely disappointed China bulls,\u201d said Rajeev De Mello, a global macro fund manager at GAMA Asset Management. \u201cThe performance gap between US and China equities is staggering.\u201d
–With assistance from Ishika Mookerjee.
(Updates Saturday announcement on possible changes to the curbs in seventh paragraph)
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HONG KONG (Reuters) -Chinese regulators announced on Friday a wide range of rules aimed at curbing spending and rewards that encourage video games, dealing a blow to the world's biggest games market, which returned to growth this year. The new rules, which will effectively set spending limits for online games, sparked panic among investors, wiping off nearly $80 billion in market value from China's two biggest gaming companies, as investors sought to gauge the potential impact on earnings and more restrictions in the offing. Online games will now be banned from giving players rewards if they log in every day, if they spend on the game for the first time or if they spend several times on the game consecutively.
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