FAST NEWS: Gaming Stocks Jump After China Ends Licensing Freeze

The latest: After an eight-month halt in new video game approvals, China’s National Press and Publication Administration announced Monday that 45 local games have been approved for new licenses, including 39 mobile games.

Looking up: The resumption of game approvals has been eagerly awaited by Chinese video game publishers, which expect that more games will be approved for release in the second half of the year. The new releases will help companies to replace their older titles that are losing popularity.

Take Note: Games from companies such as Baidu (BIDU.US; 9888.HK), XD Inc. (2400.HK) and Kingsoft (3888.HK) were approved in the new announcement. But titles from industry leaders Tencent (0700.HK) and NetEase (NTES.US; 9999.HK) were not among the first batch of approvals.

Digging Deeper: China’s gaming industry has been criticized for encouraging addiction and big spending among young people, with some official media even accusing the sector of peddling “spiritual opium.” Last August the National Press and Publication Administration issued a notice limiting minors to three hours of online gaming per week. The agency has not announced any new game approvals since last July to scrutinize whether new license applicants comply with official restrictions and stricter standards for child protection. The approval of 45 games alleviates the industry’s greatest uncertainty, and should help to calm investors’ fears.

Market Reaction: Gaming-related shares jumped in Hong Kong on Tuesday after the release of the new approvals. The best performers included Fingertango (6860.HK), IGG (799.HK), XD Inc. and Bilibili (BILI.US; 9626.HK), which closed at the midday break with gains of between 5.3% and 10.3%.

Translation by Jony Ho

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