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Chinese Tech Stocks Fell After Tencent Shuts Game Streaming Site

Tencent decision to shut down its game streaming service comes over a year after Beijing opposed a merger between its investees.

Chinese Tech Stocks Fell After Tencent Shuts Game Streaming Site

Tencent Holdings Ltd.’s decision to shut down its game streaming service further harmed confidence in a sector already beleaguered by regulatory threats, sending Chinese tech stocks down for a third day.

The Hang Seng Tech Index fell 1.2 percent on Friday, after falling as much as 3% earlier. Bilibili Inc., a video streaming company, and Tencent supplier GDS Holdings Ltd. reported some of the worst performances. Meituan dragged on the index as well, following news that Sequoia Capital had decreased its shareholding. 

Tencent’s decision comes over a year after Beijing opposed a merger between its investees, under which the Penguin Esports platform would have been incorporated. China’s tech equities have recovered from a record low in mid-March, but have failed to make a sustained rebound due to regulatory concerns.

On Thursday, live streaming platforms shares led a drop in Nasdaq-listed Chinese firms, with the Nasdaq Golden Dragon China Index finishing 4.5 percent down.

Following the yearlong crash, investors remain fearful of the fragile IT industry, with shares lately falling as a result of Beijing’s crackdown on tax fraud in the live-streaming business. Even while Chinese officials have frequently pledged to provide policy stimulus and calm markets, it has done nothing to alleviate fears about the impact of increased US interest rates, among other threats.

China’s regulator announced on Friday that it will launch a campaign to combat algorithm breaches in internet businesses’ algorithms until early December, warning that influential websites and platforms will be targeted.

According to Wai Ho Leong, strategist at Modular Asset Management, the move appeared to guarantee that tech companies be honest with customers about the data they are gathering to preserve privacy.

However, because some applications already allow users to disable tailored push notifications, the spirit of these restrictions and the impending inspections and audits may have been foreseen since earlier this year, he said.

Meanwhile, the wider Hang Seng Index recovered losses to rise 0.3%, spurred by a surge in property and banking stocks. The benchmark CSI 300 Index in China finished 0.5% higher.

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