Chinese Investors Buy $745M in Reduced Tencent Stocks

The last month has been a rollercoaster for Tencent, and Chinese investors are buying the dip.

Traders from the world’s most populous country bought $745 million of the Shenzhen-based tech giant’s stock in August. Tencent’s stock tumbled 45.8% from an all-time high in February to a year low in mid-August.

The Chinese government has cracked down on the gaming industry with a series of measures, including Monday’s declaration that minors may only play video games for three hours a week, and not on school nights. 

Earlier in the month, global investors sold off Tencent and other Chinese video game stocks after a government-affiliated newspaper called video games “spiritual opium,” specifically calling out Tencent.

Tencent owns a slew of popular games, including “Honor of Kings,” “Clash of Clans,” and “League of Legends.”

• Gaming, its largest segment, accounted for $6.7 billion of Tencent’s $21.4 billion second-quarter revenue.
• Analysts, worried both about the short- and long-term impacts of China’s regulations, cut Tencent’s earnings forecast by 5% over the next 12 months.
• Tencent has shifted employees toward its own video game streaming app, Penguin eSports, after Chinese regulators scuttled a proposed merger between Huya and Douyu. Tencent has major investments in both companies. 

NetEase, China’s second-largest gaming company, dropped 31% from mid-July to mid-August but has recovered about halfway since then.