China crashes Naspers

Shares in Naspers and its European-listed subsidiary Prosus slumped on Friday after China issued a raft of new measures that limit players’ spending within videogames, dealing a blow to the value of the company’s holding in Chinese internet giant Tencent Holdings.

Prosus slid as much as 20% in Amsterdam trading, erasing €14-billion (R284-billion) of market value. Naspers also slumped by a fifth, while Tencent — in which Prosus holds a 25% stake — closed down 12% in Hong Kong.

China’s gaming regulator on Friday published draft rules aimed at clamping down on practices that encourage players to spend more money or time in online games. A sweeping set of curbs on in-game rewards for frequent logins and purchases stoked fears of another industry crackdown in the world’s biggest mobile gaming arena.

According to Bloomberg Intelligence analyst John Davies, Prosus’s stake in Tencent leaves it sensitive to factors outside of its influence. The holding “casts a shadow over its other investments, and appears unlikely to change soon”, he said.

Prosus’s stock performance is closely linked to that of Tencent, given that three-quarters of its sum-of-the-parts value lies within the Chinese conglomerate. The Dutch firm counts on Tencent as its biggest investment in a wide-ranging portfolio of technology stocks.

Prosus has been trimming its investment in Tencent for more than a year to fund a buyback programme. The company said earlier this month that its ownership dropped below 25%.

Read: Naspers profit doubles, e-commerce portfolio nears breakeven

In Johannesburg, local benchmark the FTSE/Africa All-Share Index declined as much as 1.8%, with Naspers and Prosus the biggest drags on the market.  — Henry Ren, (c) 2023 Bloomberg LP

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