Tencent And NetEase Stocks Continue To Rebound As China Reportedly Ousts Official Who Proposed New Gaming Restrictions

Summary: The head of China's gaming industry regulation has reportedly been dismissed, following a stock market downturn caused by proposed online gaming restrictions introduced in December. China's gaming stocks dropped significantly before recovering slightly during the festive season, following proposals to limit player spending and activity. Feng Shixin, the chief of the Communist Party’s Central Propaganda Department’s publication bureau, was allegedly forced to resign. The bureau, under Feng’s control, also supervised the National Press and Publication Administration (NPPA). This body published the controversial gaming regulation proposals, resulting in an $80 billion stock market loss. Following Feng’s exit, shares in China’s largest games publisher, Tencent, increased by 1.2%, and shares in another gaming giant, NetEase, jumped by 1.5%. Observers speculate that Feng's departure may signal Beijing's intent to reassess the proposed NPPA regulations. Tencent, NetEase, and other game publisher shares have begun a sluggish recovery as the Beijing government hinted at a willingness to collaborate with the industry on the new legislation. The NPPA attempted to mitigate fears by approving 105 new video games on Christmas Day—the most approvals in one go since July 2022. However, Tencent stocks are still down by over 5% from their peak in December, with NetEase stocks down by more than 11%. The NPPA's draft rules from last month proposed significant restrictions on online games, causing anxiety over a broader industry crackdown. These included spending limits, alerts against "irrational consumption", restrictions on reward-based player activity, content censorship, and age verification and access limitation requirements for minors.