China’s Tencent stocks plunge as controls tighten on child gamers

TENS of billions of pounds were wiped from global gaming stocks as a crackdown on child players sparked a rout.

Tencent, the Chinese publisher and world’s biggest gaming company, said it would curb children’s access to its most popular video games to as little as one hour a day, sending its shares down by as much as 10pc and wiping more than £40bn off its market value in Hong Kong.

Players under 12 would be blocked from spending money within games.

The new restrictions followed calls from Beijing-backed media for further limits on video games.

China is battling what it regards as video game addiction among children, with state newspapers labelling online games “spiritual opium”.

Shares in Netease, another of China’s gaming giants, dropped close to 8pc, knocking close to £4bn from its market cap in Hong Kong.

The new limits from Tencent, which owns dozens of games companies around the world, caused jitters among gaming investors across Europe.

In the UK, Sumo Group, a Sheffield games developer that is in the process of being acquired by Tencent in a $1.3bn (£930m) deal, declined to comment on the crackdown imposed by its new owner. Tencent declined to comment. Shares in Sumo fell 1.9pc.

It is understood that any restrictions brought in by Tencent are only likely to be imposed on its domestic market, where it publishes games such as online fighting game Honor of Kings, which is played by 100m people. However, European stocks were still rattled by the news. Amsterdam-listed Prosus, which holds a 29pc stake in Tencent, fell 6.9pc.

Uk-listed gaming stocks also dipped on the uncertainty in the sector. Frontier Developments, in which Tencent is a shareholder, fell more than 4pc, as did newly listed developer Tinybuild.

The fall in gaming stocks began after Chinese state media lashed out against games makers, the latest in long-running attacks on the sector that some believe is making youngsters addicted.

In June new rules required Chinese game developers to include age verification technology to weed out under age players. Tencent said it was developing facial recognition technology that would be included in its games in China and block young users from playing past their allotted hours.

State-backed The Economic Information Daily accused games companies of “destroying a generation” and called online games “electronic drugs”

Tencent’s acquisition of Sumo still requires regulatory approval after the deal was referred to the Washington’s Committee on Foreign Investment in the United States, due to a US studio that is owned by the British company.

Patrick O’donnell, an analyst at Goodbody, said the referral had make some shareholders “jittery” and that Sumo continued to trade at a wide discount against the offer from Tencent.

He said: “I don’t expect the China angle to be a detriment to the deal, but on the other hand if you look at Tencent’s most recent deals this year none have been in the US.”

Sumo shareholders have been offered $7.08 a share, while the company was trading yesterday at about 484p ($6.74).