Asia report: Stocks weaker as Beijing turns attention to online gaming

Stock markets were in the red on Tuesday in the Asia-Pacific region, with the China-based online video gaming sector hit particularly hard as it became the latest target of regulators in Beijing.
In Japan, the Nikkei 225 was down 0.5% at 27,641.83, as the yen strengthened 0.11% against the dollar to last trade at JPY 109.19.

Of the major components on the benchmark index, robotics specialist Fanuc was down 0.76%, Uniqlo owner Fast Retailing lost 0.89%, and technology giant SoftBank Group was off 0.73%.

The broader Topix index lost 0.46% by the end of trading in Tokyo, to settle at 1,931.14.

On the mainland, the Shanghai Composite was off 0.47% at 3,447.99, and the smaller, technology-centric Shenzhen Composite was off 0.53% at 2,423.97.

South Korea’s Kospi was the region’s odd one out, rising 0.44% to 3,237.14, while the Hang Seng Index in Hong Kong was down 0.16% at 26,194.82.

Shares of technology behemoth Tencent dropped 6.11% in the special administrative region, while gaming-invested peers Bilibili and Netease were 3.44% and 7.77% lower, respectively.

Those moves came after the Economic Information Daily published accounts of concern over the amount of time young Chinese people were spending playing video games online, describing it as a kind of “opium”.

The publication, which is tied to state-controlled news agency Xinhua, deleted the article several hours after publication, however.

Seoul’s blue-chip technology stocks were on the front foot, with Samsung Electronics up 2.65% and SK Hynix adding 3.45%.

“Fears over Chinese regulatory interference aren’t going away, with Tencent the latest stock to slump on chatter about Beijing seeking to wield its power,” said AJ Bell investment director Russ Mould.

“Talk that gaming will be the next sector to come under pressure from the authorities in China saw Tencent’s shares fall more than 10% at one point on Tuesday.

“They are now down by more than a fifth year-to-date as investors reassess their willingness to have exposure to big Chinese names.”

Mould said regulatory fears in China were turning out to be one of the big stories of 2021 for global markets, overshadowing what many thought would be the key focal point for the region, namely a year of strong economic growth.

“As part of the broader issues troubling Asia, it is also worth watching property developer China Evergrande after yet more suppliers said payments were overdue.

“This highly indebted company is one of the biggest players in the Chinese property market and it would be highly embarrassing to the government if it collapsed due to financial pressures.

“Its shares fell nearly 8%, meaning the stock is now down by 63% year to date.”

Oil prices were higher as the region went to bed, with both Brent crude and West Texas Intermediate last up 0.81%, at $73.48 and $71.84 per barrel, respectively.

In Australia, the S&P/ASX 200 weakened 0.23% to 7,474.50, as shares of pay-later lender Afterpay surged for the second session in a row, adding 11.37% in Sydney.

The company’s stock rocketed more than 18% on Monday, after US-based fintech group Square agreed to buy the Aussie firm.

Australia’s central bank, meanwhile, stood pat on its cash rate target after its latest meeting, keeping it at a record low 0.1%, as expected.

The Reserve Bank of Australia also maintained its current bond-buying strategy as well, after a number of market watchers expected it to delay its planned tapering given fresh outbreaks of Covid-19 and new social restrictions in a number of states.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 closed just below the waterline, stepping back 0.02% to 12,700.50, led lower by the cargo and logistics sector amid concerns that the ‘Delta’ variant of Covid-19 was slowing the global economic rebound.

The country’s largest port operator Port of Tauranga was down 2.5%, and freight conglomerate Mainfreight was 2.1% weaker.

“The RBA has announced the outcome of its latest monetary policy meeting – all existing policy settings were left unchanged, including the plan to taper its government bond purchases during September,” noted analysts at Rabobank.

“Meanwhile the Reserve Bank of New Zealand has announced that it will soon begin consulting on two ways in which it intends to tighten mortgage lending standards in the country.”

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.37% at AUD 1.3529, and the Kiwi advancing 0.47% to NZD 1.4278.

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