Shares rise after China takes down draft video game regulations

Regulations that China's gaming watchdog had put forth a month ago to limit incentives to play video games and related expenses have since been removed from the website.

The move by the Chinese government has provided a much-needed boost to the stocks of gaming companies.

After functioning on Monday, the National Press and Publication Administration's (NPPA) website link to the draft rules was broken as of Tuesday morning.

Monday was the last day to submit comments on the regulations, which caused a stir in the market upon their initial announcement.

Analysts saw the withdrawal as odd, with some speculating that a correction would be forthcoming. A request for comment regarding the rationale behind the removal was not immediately answered by the NPPA.

The largest gaming company in the world, Tencent Holdings, saw its shares rise by as much as 6% in morning trading, while NetEase, its closest rival, saw a 7% increase. At noon, the shares of both firms had gained over 4%, while the Hang Seng Index in Hong Kong had increased by 2.4%.

Upon their announcement, the two largest gaming companies in China lost nearly $80 billion in market value due to investor panic caused by the draft regulations that suggested imposing spending caps on online games.

At the time, analysts said that the plans hurt investor confidence at a time when the government was trying to increase private-sector investment to revive a slowing economy because they raised the possibility of future regulatory changes.

Five days later, however, the NPPA adopted a more accommodative stance, promising to enhance them through "earnestly studying" public opinions. It was announced earlier this month that China has fired a gaming regulatory officer in a move related to the regulations.