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Blood on the tracks: Chinese game stocks hit hard as market sentiment weakens

Over $2 billion wiped off top company valuations

Blood on the tracks: Chinese game stocks hit hard as market sentiment weakens

As if to underline the challenges of the Chinese games market, the start of the week has seen strong falls on some company stocks.

Changyou [NASDAQ: CYOU] and KongZhong [NASDAQ: KONG] - two online and mobile publishers - were hit especially hard.

Changyou shares were down 20 percent, losing around $380 million of market cap, while KongZhong dropped over 18 percent.

Meanwhile, China Mobile Games & Entertainment group [NASDAQ: CMGE] saw its shares down over 8 percent, Shanda Games [NASDAQ: GAME] was down 6.6 percent, and NetEase [NASDAQ: NTES] was down over 10 percent.

In total, around $2 billion was wiped off the value of Chinese gaming companies.

Down, down

Significantly, this downward pressure was seen across the majority of Chinese technology stocks floated on the US NASDAQ and NYSE exchanges.

This included platform companies such as Baidu [NASDAQ: BIDU] and Qihoo 360 [NASDAQ: QIHU], both down over 3 percent.

It's currently the season for companies to report their financials for the three months ending 30 September 2013. Consumer sentiment from China has been hit by weak sales of consumer goods such as cars and liquor; something that seems to have been passed onto gaming stock.

Another factor is that some stocks have been near their 52-week highs, suggesting some investors might be banking their gains.

Conversely, however, troubled US mobile games publisher Glu Mobile [NASDAQ: GLUU] saw its share rise 12 percent.


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Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.