Tencent leads $60 billion loss as game crackdown expands

NEW YORK: Tencent Holdings Ltd. and Netease Inc. shed more than $60 billion of value as investor fears grow that Chinese regulators are preparing to tighten their grip dramatically on the world's largest gaming industry. Chinese regulators summoned industry executives to a Wednesday meeting to instruct them to break their "solitary focus" on profit and prevent minors from becoming addicted to games, according to the official Xinhua News Agency. Regulators also said China will slow down approvals for all new online games, the South China Morning Post reported Thursday.

The newspaper corrected an earlier report that said China had put a freeze on game approvals. Tencent's ADRs then recovered some of their losses, closing 2.8% down after falling as much as 5.2%. Netease's ADRs finished 2% lower after sliding as much as 6.9%.

Investors are already on edge because of a monthslong government campaign to rein in industries from ecommerce and ride-hailing to social media. Xinhua made no mention of the approval suspension. Xi Jinping's administration is waging a concurrent campaign to curb addiction among minors, reduce growing spending on virtual items and prod youths toward more productive pastimes. The government just last week released new regulations for the industry, including limiting the amount of time children can play video games to three hours a week.

A moratorium on new titles would mark an escalation in the gaming crackdown, hitting developers' wallets directly. It recalls a 10-month freeze on game monetization licenses in 2018, then intended to combat addiction and myopia among children. That spurred Tencent's first profit drop in at least a decade and helped wipe about $200 billion off its market value at one point.