Investors play along with game changers

Some mainland parents may be grateful to Beijing for carrying out their parental duty for them to cut back on the time children can play games online.

This is only possible in China.

Mainland regulators announced on Monday they would strengthen supervision of online game activities to make sure they are properly regulated in accordance with new regulations that took effect yesterday.

According to the regulatory updates, minors are permitted to play online games for up to three hours a week – from 8pm to 9pm on Fridays, weekends and on public holidays – in the most restrictive codes so far.

Prior to the changes, children were allowed to play games for 1.5 hours a day and three hours on public holidays.

Although game addiction is endemic elsewhere, few governments would go as far as to create a policy as elaborate as this to clamp down on such addictive behavior.

Most authorities are happy to leave that headache to be resolved by the families themselves.

Perhaps it’s because, even if they wished to, they could not do it as they do not have the tools to implement such a policy.

It is an entirely different scenario in China, where all online accounts are created using real identities and the legal framework allows the authority to check users in real time without fear of infringing on someone’s privacy.

No loophole has been left unplugged. The mainland’s largest online game maker, Tencent, has reportedly deployed facial recognition to police young people playing internet games for long hours.

This eliminates the possibility that some youngsters may circumvent restrictions on use by playing on an adult’s smartphone. If it is found that they are not the registered owner, the game halts.

By most standards, the official announcement to cut back further on gaming hours should be bad news for technology stocks and could start a new round of sell-offs. However, this has not happened of late. Contrary to fears that the crackdown would resonate in the tech sector with a market jolt, the reaction was moderate. Yesterday, Tencent recovered 1.5 percent when it was supposed to be the hardest hit.

Even so, the stock has lost more than one-third of its value since peaking in February.

While yesterday’s gain may be attributed to bargain hunting following a period of stampeding prompted by Beijing’s crackdown on big tech and education companies, it is likely that some market players are also learning to live with the new normal.

Either investors have become numb or they have come to terms with the reality that they don’t actually have a choice as long as they continue to participate in the Chinese economy.

There’s no question that Beijing is rewriting the norm and it is probable that more regulations will follow.

Unless they quit, investors will have to play along, with the full understanding that it’s going to be a new playing field.

In this light, US Fed chairman Jerome Powell’s recent dovish talks may offer a timely cushion.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.