Tencent sparks $80 billion selloff amid China crackdown fear

In an unforeseen turn of events, Tencent Holdings Ltd. spearheaded an $80 billion selloff, rattling some of China’s largest online entities.

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The abrupt imposition of new gaming regulations on December 22 rekindled concerns that Beijing might once again be targeting the country’s expansive internet sector. The leading gaming regulator unveiled draft rules designed to curb practices encouraging excessive spending and time spent online. These rules encompass caps on in-game spending, a ban on rewards for frequent log-ins and forced player duels, and a prohibition on content violating national security. The far-reaching restrictions, revealed on the final trading day before Christmas, drew comparisons to the tech sector crackdown of 2021, which had a profound impact on various industries, including e-commerce, entertainment, and online education.

Similar to the events of two years ago, the regulations emerged unexpectedly, causing confusion among industry players and investors. The vague and all-encompassing nature of the rules left many struggling to decipher their intent and potential consequences. Outraged and bewildered posts flooded a WeChat group comprising hundreds of developers and designers, with particular concerns raised about the unspecified cap on player spending. Chinese games are renowned for clever designs and promotions enticing players to spend on avatar customization, a primary source of income for Tencent and its competitors.