Bewildered investors in China’s tech sector scrambled once again from regulators on Tuesday, fearing that a state media story that likened internet gaming to opium signals a new front in the barrage of scrutiny that is being directed toward big business.
The article was later altered to remove the historically loaded opium reference, but, together with the opening of a probe into automotive chip distributors, it roiled markets still smarting from a panic sell-down a week ago.
Tencent, the social-media-to-gaming behemoth, fell 6% and was briefly knocked from its mantle as Asia’s most valuable company, while semiconductor stocks slid as the moves seemed to unwind authorities’ days-old promise of a calmer hand.
“This drip feed of ‘potential’ regulations constitutes a tsunami of uncertainties,” said Richard Kramer, managing partner of Arete Research.
“People want to know when it’s time to buy, but there’s not yet something concrete in the rules to find as a floor.”
Shares in gaming firm NetEase fell nearly 8% on Tuesday while losses were even bigger for game developer XD Inc which fell 8% and mobile gaming company GMGE Technology Group Ltd which dropped almost 14%.