Alibaba, Tencent stocks extend slide amid concerns over health of Chinese markets

A weaker yuan makes Chinese exports cheaper cushioning the impact of the tariffs imposed by US President Donald Trump

Revenue rose 30 per cent to 73.7 billion yuan, compared with analyst estimates for 77.7 billion yuan.

Tencent has been hit by a shifting regulatory environment in China, which has made it harder for the company to win approval for the sale of its games.

"At this point in time, we don't have visibility on when exactly the official approval will start yet", said President Martin Lau on a conference call with investors. All of this has combined to undercut Tencent's earnings, recently dropping $150 billion in market value.

Now it has been a while since this the regulator took this step and by now some of the major companies in the Chinese Gaming Industry alongside global companies, have started to feel the heat.

Not only did China clamp down on popular title Monster Hunt, but Tencent still doesn't have the approval to bring PUBG or Fortnite to PC in China, and its financial results show some slowing.

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The Chinese government has been halting its approvals of new online game licences as Chinese President Xi Jinping pushes a "purification" campaign in media and entertainment, according to reports. Tencent's hugely popular mobile game, Honor of Kings, also fell victim to regulations previous year, over concerns that teens were spending too much time on it.

Lau said that "games fundamentals are as strong as ever", but admitted that his biggest game could not get onto the market.

Video was one of the bright spots in the company's results, with its Netflix-like streaming service reaching 74 million subscribers, up 121% from a year ago. As we said earlier, it's hard enough getting a game or product to "pass" China's censorship board.

Further reading: China freezes game approvals amid agency shakeup and Nasty earnings surprises dog China's tech darlings on Bloomberg (both with porous paywalls).

"If they previously didn't get an approval, it seems that there will continue to be a hold on that".

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This doesn't, of course, mean that the game industry is banned in China.

China long celebrated Tencent as a national champion.

While Tencent's shares fell by 3.9 percent, it isn't just the Chinese video game market that is devastated by the freeze.

The timing is particularly painful for the world's biggest gaming company.

Last year Tencent was one of several private Internet companies that had to inject funds into a struggling state telecom. Alibaba Group affiliate Ant Financial was initially cheered for providing everyday people and small businesses with easier access to loans and other financial products.

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