Online Gamers Snap Back in Hong Kong With More Wild Moves
Two Hong Kong Companies in Lose More Than 75% of Value
(Bloomberg) -- Two Hong Kong-listed online gaming companies that lost more than 60 percent of their value Thursday saw big gains in early trading Friday, another example of wild moves in the world’s fourth-biggest stock market.
While FingerTango Inc. and Digital Hollywood Interactive Ltd. fell as much as 80 percent and 76 percent Thursday, respectively, their shares rose as much as 60 percent and 19 percent on Friday morning. The firms issued statements late Thursday, with Digital Hollywood saying some shareholders had sold pledged stock to meet loan obligations. FingerTango said it couldn’t explain the fall.
Thin trading volumes, concentrated holdings and poor corporate governance have all contributed to a series of collapses in Hong Kong stocks, perhaps the most notable of which was the 85 percent plunge in China Huishan Dairy Holdings Co.’s shares last year. The city’s financial regulator and stock exchange owner have both decried the extreme swings and issued rules in response.
The Thursday declines came after Bloomberg News reported that Tencent Holdings Ltd. is slashing the marketing budget of its gaming division, another blow to an industry that’s been hammered this year after Chinese regulators froze the approval process for new titles.
Digital Hollywood also said in its statement that the controlling shareholders plan to increase their holdings in the next six months. FingerTango said its chairman increased his stake on Thursday, in what it said was a sign of confidence.
Another online game maker, Shenzhen-based 7Road Holdings Ltd., lost as much as 12 percent on Thursday before closing down 10 percent. The shares rose as much 7 percent Friday before falling back, and were down 1.6 percent at 10:36 a.m. in Hong Kong on Friday. The company has said Tencent is a distributor of its games, while FingerTango called the Chinese giant a marketing partner. 7Road’s chairman is a board member of Digital Hollywood.
Tencent is making the cut amid regulatory disruptions and a slowdown in the Chinese economy, according to an internal memo seen by Bloomberg.
--With assistance from Crystal Tse.
To contact the reporters on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net;Benjamin Robertson in Hong Kong at brobertson29@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Ben Scent
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