Tencent Stock Is Sliding. Regulators Could Target ‘Spiritual Opium.’

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Updated Aug. 3, 2021 8:35 americium ET / Original Aug. 3, 2021 6:40 americium ET

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Tencent office successful the confederate Chinese metropolis of Shenzhen, successful Guangdong province.

Neol Celis/AFP via Getty Images

Chinese stocks were sliding erstwhile again amid concerns that Tencent could beryllium targeted by regulators.

Tencent (ticker: 700.Hong Kong) was sliding aft an nonfiction published successful a state-controlled work accused it and different gaming companies of being “spiritual opium,” raising concerns that regulators would people it next. Shares of Tencent had dropped 6.1% astatine 6:19 a.m. EST.

The Shanghai Composite dropped 0.5% Monday, portion Hong Kong’s Hang Seng Index fell 0.2%. U.S. exchange-traded funds devoted to Chinese stocks, however, were deed harder. The KraneShares CSI China Internet ETF (KWEB) was disconnected 2.4% successful premarket trading, portion the iShares MSCI China ETF (MCHI) had declined 1%, and the iShares China Large-Cap ETF (FXI) had slipped 0.7%.

Such selling seems similar an evident absorption fixed the deed U.S.-listed Chinese stocks person taken successful caller weeks arsenic China cracked down connected companies similar Didi Global (DIDI) and moved to unit for-profit acquisition companies similar Tal Education Group (TAL) and New Oriental Education & Technology Group (EDU) to go nonprofits.

Still, not everyone is arsenic concerned. “We judge the marketplace has over-reacted to the ‘catchy title’ nonfiction published by the Economic Information Daily connected Aug. 3 calling for the strengthening power of extortion to code addiction of insignificant users connected online games.,” writes Alicia Yap, citing steps that companies similar Tencent and NetEase (NTES) had already instrumentality to bounds crippled playing by minors, among different factors. “[It] is understandable that immoderate existent oregon untrue quality could nonstop panic ‘sell-first’ unit to the market. We judge definite unwarranted sell-off could heighten buying opportunity.”

One investor’s buying accidental is another’s falling knife.

Write to Ben Levisohn astatine ben.levisohn@barrons.com

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