Tencent has officially lost its status as China’s largest company, falling 64 percent from its peak in January 2021, reports Bloomberg.
This fall sees the company’s market value tumble by $623 billion – the largest fall of any company globally.
This follows the company posting its first quarterly loss since listing earlier this year, followed by the layoffs of around 5500 staff.
This fall is due in part to the harsher impositions imposed on the gaming sector in China. Last year the country halted the issuing of new gaming licences, and although such licences have recently begun to be issued once again, stricter censorship is being imposed, bringing the gaming sector closer in line with film and television.
Additionally the country has imposed strict regulations on young gamers, restricting those under eighteen to one hour of gaming on Fridays, Saturdays and Sundays. Although a Tencent subsidiary received a new game licence last month, it appears that this isn’t enough to overcome the recent struggles imposed on the company.
Struggles for the Chinese gaming industry
Another factor in this tumble in value is China’s slowdown in economic growth compared to other countries. Liquor giant Kweichow Moutai Co. is now China’s largest company, which exceeds Tencent’s valuation by approximately $5.4 billion. Moutai is also eligible for support for consumer-driven sectors announced by Beijing.
“There are no positive catalysts for Tencent in the second half, since its earnings will continue to be under pressure from the weak macro environment,” said KGI Asia Ltd head of investment research Kenny Wen. “And even when that improves in China, we are in an era of monetary tightening, so it will be hard to climb back to where it was when central banks were easing.”
The challenges faced by Tencent have seen investors selling their stakes in the company, with $30 billion of shares being sold this year through to September 20th – the most of any tech firm in China.
In August, we listed Tencent as one of the top 50 mobile game makers of 2022.
