Shares of Tencent (TCEHY +0.38%), the Chinese tech giant and parent of WeChat, were moving higher today on news that Beijing had taken a step to support the gaming industry, potentially signaling looser regulations following the crackdown on the tech industry that began three years ago.
Chinese gaming stocks fell earlier on a proposal to restrict spending on video games. But Beijing seemed to reverse its position today after it removed the official in charge of regulating China's video game sector, Feng Shixin.
As a result, Tencent stock was up 3.1% as of 12 p.m. ET.
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Tencent gets a reprieve
Like other Chinese tech stocks, Tencent has struggled in recent years with a crackdown on the sector and a weak economy weighing on the stock, but today's move shows that Beijing may be starting to reverse course and encourage growth in the sector.
According to Reuters, Feng was removed in connection with rules that China's video game regulator announced last month that sent sector stocks plunging.
Tencent is one of China's biggest gaming companies. It wholly owns Riot Gaming and is a minority owner in gaming companies like Epic Games and Ubisoft. Other Chinese gaming stocks like NetEase also rose on the news.
OTC: TCEHY
Key Data Points
What's next for Tencent
After a sharp drop through 2021 and 2022, revenue growth has begun to recover at Tencent, with the top line increasing 10% to $21.5 billion.
Tencent is diversified and makes money through a diverse set of revenue streams like financial services, including WeChat Pay, and e-commerce, as well as a broad array of investments.
However, gaming is a key component of the company's business and a softening stance from Beijing should benefit the business. Investors should keep an eye on future developments on the regulatory front.
