Gaming restrictions and selling out; here’s the week that has been for the ASIA ETF…
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It has been an intense week for the BetaShares ASIA Technology Tigers ETF (ASX: ASIA).
Earlier in the week, heightened scrutiny surrounded the exchange-traded fund (ETF) after China announced tightening restrictions on online gaming for children.
Despite the government announcement, the value of the ASIA ETF has climbed 4% over the course of the week.
What’s happening with the ASIA ETF?
While the China government’s decision initially took a toll on gaming and tech companies, most have sprung back during the latter half of the week.
According to publications, China has opted to reduce gaming time for people under the age of 18. Under the new rules, minors will only be allowed to indulge in online gaming between 8:00 pm and 9:00 pm on Fridays, weekends, and public holidays.
One would assume this would decrease traffic and revenue for gaming giants exposed to China. However, companies and analysts have remarked that these new regulations are unlikely to have a big monetary impact.
For example, NetEase Inc (NASDAQ: NTES) stated that less than 1% of its revenue is derived from people under 18. Meanwhile, analysts estimate that roughly 5% of Tencent’s gaming revenue is at the peril of the young demographic.
During the week, Tencent has gained 5.8%, Sea Ltd (NYSE: SE) surged 6%, and NetEase rallied 5.1%. All three of these companies make an appearance in the top 10 holdings of the ASX-listed ASIA ETF.
Funds sitting on the sideline
Additionally, Australia’s sovereign wealth fund — the Future Fund — has decided to reduce its positions in China shares. The decision comes as relations between Australia and China are challenged.
Prior to this statement, Alibaba Group Holding Ltd (NYSE: BABA) and Tencent had been the fund’s sixth and seventh largest positions. One can assume, that may no longer be the case.
At the time of writing, the ASIA ETF is trading 0.38% lower to $10.48 per unit.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alibaba Group Holding Ltd. and Sea Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended NetEase. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.