Why Tencent stock rose today

stock tencent (Czech 3.21%)The Chinese tech giant and parent company of WeChat rose today following news that the Chinese government has taken steps to support the gaming industry. It was a sign of potential regulatory relief following a crackdown on the tech industry that began three years ago.

Chinese gaming stocks fell early on proposals to limit spending on video games. But China appeared to change its stance today after firing Feng Shixin, the head of the country’s video game sector regulator.

As a result, Tencent shares were up 3.1% as of 12 PM ET.

Image source: Getty Images.

Tencent gets a reprieve

Like other Chinese tech stocks, Tencent has suffered in recent years from a crackdown on the sector and a weak economy weighing on the stock, but today’s move suggests China may be changing course and starting to spur growth in the sector. It shows.

According to Reuters, Feng was removed following rules issued by China’s video game regulator last month as shares in the sector plummeted.

Tencent is one of China’s largest gaming companies. It fully owns Riot Gaming and is a minority owner in gaming companies like Epic Games. Ubisoft. Other Chinese gaming stocks such as NetEase It was also on the news.

Tencent’s next move

Tencent’s revenue growth began to recover after plummeting through 2021 and 2022, with revenue growth rising 10% to $21.5 billion.

Tencent is diversified and generates profits through a variety of revenue sources, including financial services such as WeChat Pay and e-commerce, and extensive investments.

But gaming is a key component of the company’s business, and Beijing’s easing stance will help that business. Investors should keep an eye on future developments in the regulatory space.