People socialise in a bar in Beijing, China. Beijing has pledged policy support for consumer-driven sectors as regulatory risk and dimming growth prospects set back the country’s technology industry. File photo: REUTERS/THOMAS PETER
The fall of Tencent — which was on the verge of becoming Asia’s second-trillion-dollar firm in early 2021 — reflects the many risks facing the sector. Beijing’s overhaul of gaming companies coupled with the nation’s slowing economic growth remain the biggest hurdles for a recovery. For Tencent, there are challenges on all sides. A slow drip for new gaming approvals as well as limits on playing time for minors has continued to affect its bottom line. Beijng’s strict Covid-Zero policy and sporadic lockdowns have damped economic growth and hit advertising revenues. A broader selloff driven by fears of aggressive US Federal Reserve tightening is also weighing on shares.