Chinese Internet Shares Hit Three-Month High

Chinese online stocks jumped to a three-month high after regulators in China released dozens of video games for release, a move that investors welcomed as a recent sign that Beijing is softening its stance on the technology sector.

Late Tuesday, the country’s National Press and Publishing Administration said it had approved 60 video game titles. The regulator gave the green light to a smaller set of games in April, and before that has not given approvals since last July.

Stocks in

Bilibili Inc.,

BILI 9.96%

a gaming and gaming company, led earnings in Hong Kong on Wednesday, surging by 20%. The city’s Hang Seng Tech Index rose 4.8% to close at its highest level since early March.

“Regular pressure has eased,” said Bruce Pang, head of macro and strategic research at China Renaissance Securities. He said the new video game approvals were another positive signal for the internet sector, and had a devastating impact on other companies including

Alibaba Group Holding Ltd.

BABA 5.36%

the e-commerce giant.

Shares listed in Hong Kong by Alibaba jumped 10% on Wednesday, while those in gaming and social media weighed heavily.

Tencent Holdings Ltd.

rose 6.5%. Neither Tencent nor a smaller rival

NetEase Inc.

had any games in the two most recent sets of approvals. Bilibili also did not have any games approved in this round.

Chinese technology companies have suffered a major setback since late 2020, when Beijing halted the popular initial public offering of Alibaba’s financial technology subsidiary, Ant Group Co. In another key initiative, authorities last August. introduced rules restricting minors up to three hours a week of online gaming.

However, as the Chinese economy has slowed sharply this year, the tone has changed, and so have major Chinese political bodies, including the Politburo of the ruling Communist Party. expressed his support for the sector.

In another sign of policy easing, The Wall Street Journal reported on Monday that China was concluding a one-year probe into a riding-hall giant

Didi Global Inc.,

one of the companies that was most affected by the technical ban.

Analysts at Citigroup said Tuesday’s approvals strengthened their confidence that the pace of game approvals is returning to normal as major Chinese cities reopen after tight confinement, and with severe measures now in place to protect younger players. They said the Tencent and NetEase titles are likely to be included in later sets of game releases.

The recent series of positive economic and regulatory developments have all helped lift the mood of the market, said Prox Iamthongthong, senior investment manager at


“It’s an understanding that the worst is over in terms of regulation, and we see a light at the end of the tunnel,” said Ms. Iamthongthong, co-manager of the Asia Dragon Trust, which owns a number of large Chinese online stocks.

Particularly on Wednesday, Tencent said it will launch its “Honor of Kings” title internationally before the end of this year. Tencent’s flagship mobile game, which allows teams of gamers to fight online, has more than 95% of its users in China and remains the biggest profitable driver for Tencent’s home gaming segment.

The global launch is taking place as Tencent faces growing competition at home and is more actively expanding overseas. Its revenue from domestic games fell 1% year-on-year earlier in the fourth quarter of March, while that from international games still grew 4%.

Despite the build-up, Chinese online stocks remain far from peak. The Hang Seng Technical Index is still down about 15% from the year to date, for example, and has fallen by 56% from a record high reached in February 2021.

“China’s online stock has been one of the most underrated assets over the past year, and is trading with a significant discount to historical valuations,” said David Chao, global market strategist for Asia-Pacific at Invesco. “Any material suggestion that we are coming out of the regulatory forest is a welcome sign,” he added.

Write to Raffaele Huang at and Cao Li at

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