The Chinese government is restricting online gaming for the under 18 year old demographic in order to "clean up the internet environment" and "promote civilized internet use." According to press reports, after three hours of play gamers are told to perform suitable physical exercise. After four, the player's earned point values are cut in half. And after five, the player loses all point value increases.
This move is rather significant because about 10% of the Chinese gaming population is under 18 years old, therefore it could be assumed that these measures will have a semi-significant impact on overall Chinese gaming levels.
The overall implications this move will have remain relatively unpredictable and I'm not sure how the market will react, but I've found that if the market interprets a Chinese news piece negatively it punishes many Chinese stocks, both related and unrelated to the news. If this is the case tomorrow, I'd use the weakness as a buying opportunity in two of my favorite China names: Gigamedia (NASDAQ: GIGM) and Ninetowns Internet Tech Group (NASDAQ: NINE). Gigamedia is related to Chinese gaming directly while Ninetowns isn't really related to gaming -- however it could very well sell off depending on the market's mood towards China.
This move is rather significant because about 10% of the Chinese gaming population is under 18 years old, therefore it could be assumed that these measures will have a semi-significant impact on overall Chinese gaming levels.
The overall implications this move will have remain relatively unpredictable and I'm not sure how the market will react, but I've found that if the market interprets a Chinese news piece negatively it punishes many Chinese stocks, both related and unrelated to the news. If this is the case tomorrow, I'd use the weakness as a buying opportunity in two of my favorite China names: Gigamedia (NASDAQ: GIGM) and Ninetowns Internet Tech Group (NASDAQ: NINE). Gigamedia is related to Chinese gaming directly while Ninetowns isn't really related to gaming -- however it could very well sell off depending on the market's mood towards China.
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