Tencent and NetEase fall as China reportedly tightens restrictions on video games industry

• Tencent and NetEase shares in the US fall Thursday following a South China Morning Post report.
• SCMP reported that regulators are temporarily suspending approvals for new games.
• Beijing recently restricted playing time by minors to three hours a week.

US-listed shares of Tencent and NetEase fell Thursday following a report the Chinese government has temporarily suspended approvals of new online video games, stepping up its crackdown on the video game industry.

According to a South China Morning Post report Thursday, a source briefed on a Wednesday meeting called by regulators said new approvals would be on hold "for a while" as the priority is to cut the number of new games and "reduce gaming addiction" in China, the world's biggest video games market.

Shares of Tencent fell 7.5% in premarket trade. Nasdaq-listed NetEase lost as much as 7.5% then pared the decline to about 5%.

The meeting with officials from Tencent and NetEase was led by the Chinese Communist Party's publicity department and gaming watchdog National Press and Publication Administration, centering on how they will implement the government's new restrictions on video gaming for minors, a source told SCMP.

Separate news reports said state-run news agency Xinhua reported that video game publishers including Tencent and NetEase were "urged to break from the solitary focus of pursuing profit or attracting players and fans."

Beijing's campaign against addiction to video games among minors includes recently restricting playing time by children under 18 years to three hours a week. Shares of Tencent and NetEase were slammed in the wake of the order.

Tencent's video game titles include "Honor of Kings" and "League of Legends" and NetEase's titles include "Creative Destruction" and zombie survival game "LifeAfter".