On April 2nd, Donald Trump announced an increase in tariffs and the introduction of new tariffs against most U.S. trading partners. This new wave of the trade war inevitably affected the stocks of gaming companies worldwide, especially in the Asian region. In this article, we discuss the reaction of the stock markets, which can be described as cautious panic.
Donald Trump
What Happened?
On April 5th, universal customs tariffs of 10% came into effect. Without delving into economic details, they apply to almost all goods imported into the U.S.
Starting April 9th, so-called "reciprocal tariffs" will also come into force for selected U.S. trading partners. Rates range from 10% to 50% depending on the country and region. For instance, they will be 20% for the EU, 24% for Japan, and 25% for South Korea, while tariffs for China will reach 34%. Moreover, new tariffs on China will soar to 54% considering previous hikes.
Economists and investors worldwide raised alarm bells as early as April 3rd, the day after the tariffs were announced. This inevitably led to panic on the stock markets, resulting in drops in market indices and stock prices across various sectors.
This article focuses on gaming companies from the following regions: China, Japan, South Korea, the U.S., and Europe.
Much of this article was written on April 7th when gaming companies worldwide simultaneously experienced share price losses. Some have already partially recovered their losses. However, we believe it is important to outline the overall situation and document the initial market reactions amid widespread uncertainty.
China
Some of the most significant shocks occurred with Chinese company stocks. The reaction is tied not only to the 34% increase in tariffs imposed by the Trump administration but also to Beijing's countermeasure, introducing mirror tariffs on all American imports.
On April 7th, the Hong Kong Stock Exchange experienced its largest single-day drop in nearly 30 years. The Hang Seng Index plummeted 13.22%—the biggest decline since October 28, 1997 (-13.7%), during the Asian financial crisis.
This affected Chinese gaming companies listed on the stock exchange. Tencent shares fell by 12.54% in a single day to 435.4 Hong Kong dollars per share, and NetEase shares dropped sharply by 17.91% to 135.2 Hong Kong dollars per share.
The market situation also impacted public gaming companies trading within mainland China. The CSI 300 Index dropped by 7% in a single day. Consequently, shares of 37Games (Puzzles & Survival, Soul Land), listed on the Shenzhen Stock Exchange, fell by 9.76% to 13.5 yuan per share.
Stock drop of Chinese and Taiwanese companies on April 7th
However, some experts believe that market volatility could benefit Hong Kong. Local legislator Jeffrey Lam Kin-fung urged the exchange to hasten the process of implementing planned reforms, including lowering listing requirements. He believes these measures will enhance Hong Kong's appeal to Chinese and international companies as a relatively stable region amid economic uncertainty.
The shocks also affected Taiwan, most notably evidenced by the drop in Foxconn. As the world's largest electronics manufacturer responsible for producing key gaming devices, Foxconn's relevance is underscored by its factories in China and Vietnam producing consoles like the Nintendo Switch, PlayStation, and Xbox.