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Equities

China's ban on South Korean games slays Nexon shares

Investors jittery amid geopolitical fallout

TOKYO -- Shares of online game maker Nexon fell 7% at one point Tuesday in Tokyo, as China froze new licenses for South Korean games, spurring concerns about the company founded in Seoul.

Tokyo-based Nexon's trading value ballooned 200% from the day earlier to 14.7 billion yen ($128 million), behind such companies as Sony on the Tokyo Stock Exchange's first section.

The shares closed at 1,821 yen, down 3%. For Nexon's mainstay PC-based online game business, around 90% of sales come from markets outside Japan, such as China and South Korea. Thanks to the popularity of its "Dungeon Fighter Online" game in China, the company expects operating profit to soar 700-800% on the year in the January-March quarter.

The freeze on new licenses for South Korean games in China is seen as retaliation against Seoul's deployment of the THAAD missile defense system. "If this situation continues, we cannot deny the possibility that the company's long-term expansion in China may be hampered," said Haruka Mori, an analyst at JPMorgan Securities Japan.

However, Nexon "seems to have already received approval" for the 2-D mobile phone version of "Dungeon Fighter Online" planned for release in China, according to Junko Yamamura, an analyst at Nomura Securities.

"Earnings have not been impacted" by the move by Chinese regulators, said a Nexon source. The forward price-earnings ratio is at around 22, but the company's shares are not viewed as overpriced. Investors may buy back the shares after the selling ends.

(Nikkei)

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