[Asia Economy Reporter Minji Lee] Gaming stocks continue to hit new lows. Amid growing external uncertainties, investor interest in blockchain and metaverse?which drove the rise of domestic gaming stocks last year?has waned, and the concentration of new game releases in the second half has created overlapping negative factors.
According to the Korea Exchange on the 1st, the KRX Game K-New Deal Index fell 35.47% from the beginning of this year through last month, marking the largest decline among major thematic indices. This index comprises leading domestic game companies expected to benefit from the government’s New Deal policies. Consequently, ETFs (Exchange-Traded Funds) utilizing gaming stocks, such as KODEX Game Industry (-39.21%), HANARO Fn K-Game (-37.75%), and TIGER K-Game (-37%), also showed dismal returns.
Among major stocks, Wemade experienced the steepest drop, plunging 57.8%. Investor departures continued as sales of ‘Mir4’ underperformed and expectations for virtual assets diminished. Pearl Abyss also fell 49% during the same period, with a one-week decline reaching 27%. Disappointing initial sales performance of the Chinese version of ‘Black Desert Mobile’ in the Chinese market triggered a flood of sell-offs. Other companies such as Krafton (-45.22%), NCSoft (-36.81%), Kakao Games (-35%), and Com2uS (-39.5%) also showed significant declines.
In the second half of last year, the gaming index rose by double digits (10%)?unlike other themes?thanks to P2E (Play to Earn) games leveraging blockchain technology and metaverse-related factors. However, this year, external uncertainties triggered by the U.S. Federal Reserve’s interest rate hikes and the Russia-Ukraine war, along with the resumption of reopening, adversely affected growth stocks, causing the index to plunge. In particular, the exhaustion of factors that had driven the index up last year and the lowered earnings of major gaming companies increased pressure from profit-taking sell-offs.
The last hope to revive stock prices?the issuance of game licenses (panho) in China?has also become difficult, extinguishing the spark for a rebound. On the 11th of last month, China’s National Press and Publication Administration announced a list of 45 newly licensed game titles, all from Chinese game companies, with no licenses issued for foreign games. Sojung Lee, a researcher at SK Securities, said, "The number of licenses issued for foreign games has been declining every cycle, and none have been issued this year. With the complete ban on live broadcasts of online games not approved in China, expectations for domestic game companies’ entry into the Chinese game market have further diminished."
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