Shares of Chinese gaming giants Tencent (TCEHY) and NetEase (NTES) gained 3.5% and 5.2%, respectively, on Tuesday, due to Beijing’s signals of potential rule relaxations. The recovery follows Beijing’s move to curb video game playing on Friday, which led to an $80 billion decline in the market value of both companies.
China’s video game regulator, the National Press and Publication Administration (NPPA), said it would consider the suggestions from video game makers and players. Also, it approved new licenses for 105 domestic online games for December, which included games from both Tencent and NetEase.
Last week, the NPPA announced rules that were designed to curb video game playing within the country. These proposed regulations included measures like tighter spending limits, bans on certain in-game rewards that incentivize excessive play, and the elimination of mandatory player-versus-player matches.
Which Gaming Stock is the Best?
Among the two gaming stocks mentioned above, NetEase has a Strong Buy consensus rating based on 10 unanimous Buy ratings along with a Smart Score of eight. At the same time, Tencent has a Moderate Buy consensus based on one Buy and one Hold recommendation. It is worth mentioning that Wall Street analysts see an upside potential of 46.3% and 26.3% in NTES and TCEHY, respectively, in the next 12 months.
