(Bloomberg) — Shares of Chinese video-game makers and live-streaming platforms rallied in U.S. premarket trading after Bloomberg News reported China has approved the first batch of new video game licenses since July.
Mobile game giant NetEase Inc. jumped nearly 8%. Video platform operators Bilibili Inc. and DouYu International Holdings Ltd. gained 8.5% and 6.3%, respectively. Large-cap Chinese internet stocks including Alibaba Group Holding Ltd. and Baidu Inc. also trimmed losses after the report. It wasn’t clear if the approved titles included any games from industry leaders Tencent Holdings Ltd. and NetEase Inc.
READ: China Ends Game Freeze by Handing Out First Licenses Since July
Chinese live-streaming stocks have taken a hit in the past week as Beijing vowed to crack down on any tax-related crimes such as tax evasion in the sector. The closure of Tencent Holdings Ltd.’s game streaming site Penguin Esports and a campaign to rein in potential abuse of algorithms at internet companies also weighed on investor sentiment.
While volatility in U.S.-listed Chinese stocks has eased after Beijing pledged support to overseas listings in mid-March, the Nasdaq Golden Dragon China Index lost 4.8% last week amid surging bond yields. The lingering risks of potential delistings also hurt the cohort, although Beijing modified a rule that removed a key hurdle for U.S. regulators to gain full access to audit reports for Chinese firms listed in New York.
The Chinese government “is very modestly easing back its tech regulatory scrutiny,” Vital Knowledge founder Adam Crisafulli wrote in a note this morning. The main overhang facing Chinese equities, however, are concerns over rising Covid cases and Beijing’s zero-tolerance approach toward the virus, he said.
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