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Beijing’s tech crackdown casts long shadow over South Korea’s biggest IPO in a decade
- Tencent-backed Krafton, the creator of hit video game PUBG: Battlegrounds, plunged in its trading debut in South Korea after raising US$3.8 billion
- The disappointing launch on Tuesday followed Chinese state media’s latest broadside against the video gaming industry
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Tencent Holdings-backed Krafton, developer of hit game PUBG: Battlegrounds , plunged in its trading debut on Tuesday, after raising US$3.8 billion in South Korea’s largest initial public offering in more than a decade, amid Chinese state media’s latest broadside against the video gaming industry.
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Seoul-based Krafton’s shares dropped as much 20 per cent in early trading before they closed down about 9 per cent, souring the mood for both investors and fans of PUBG.
Chinese state media’s recent attack on the video gaming industry, which an investigative piece by the Economic Information Daily described as “spiritual opium”, dealt a blow to market confidence in Krafton, which was already busy defending its high valuation target to critics, according to analysts.
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“Now you have an extremely expensive stock running into bad news that China may crack down on gaming,” said Mio Kato, founder of Tokyo-based LightStream Research.
Kato indicated that Krafton faces significant risks because the company largely relies on Tencent, which runs the world’s largest video gaming business by revenue and multipurpose super app WeChat. Tencent publishes PUBG Mobile , a smartphone version of Krafton’s flagship game, for the international market as well as its sanitised version called Peacekeeper Elite for mainland China, the world’s biggest video games market.
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