A $32 Billion Rout May Not Be End of Tencent’s Woes
- Put options have risen since China proposed new gaming rules
- Investors are uncertain about authorities’ next move: KGI Asia
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A raft of proposed new Chinese gaming curbs has wiped out $32 billion from Tencent Holdings Ltd.’s stock. The declines may not be over, looking at moves in the options market.
In a bearish sign, put options open interest has been rising relative to call options on the shares of China’s most valuable firm and its smaller rival NetEase Inc. since Beijing unveiled plans for a new round of restrictions on Dec. 22. The volatility skew shows investors have sharply pared their bullish positions on Tencent’s stock as they await the end of a consultation on the guidelines on Jan. 22.