Crackdown fears: Tencent-backed videogame maker sees shares drop 20 per cent in debut
Videogame maker Krafton has watched its highly anticipated initial public offering collapse 20 per cent in its debut, as it was rocked by fears of a gaming crackdown across the pond.
After securing a $3.8bn initial public offering (IPO), South Korea’s largest in over a decade, Tencent-backed Krafton became the first stock debut to fall on the Korean Composite Stock Price Indexes (KOSPI) mainboard.
The videogame maker had already dodged regulatory concerns when it sliced its offering by some $870m.
But fears that Beijing may be setting its sights on the gaming sector as a new regulatory target has investors spooked.
An article posted by state-run newspaper Economic Information Daily last week warned that a “new type of electronic drug” was “advancing by leaps and bounds”.
The comments via state media, likening games to “spiritual opium”, were enough to send tech heavyweight Tencent’s shares into a tailspin.
Fellow tech giant’s NetEase and XD also saw share prices fall in response to the article which has since been removed from the Economic Information Daily website.
Seoul-based Krafton’s debut was the second largest in the country after Samsung Life Insurance’s $4.3bn listing in 2010.
Despite the turbulent stock market start, Krafton ended Tuesday’s trading with a valuation of $19.3bn.