Lift in Chinese Console Ban and Market Fluctuations Contribute to Sizeable Nintendo Stock Increase
Posted by Thomas Whitehead
Will it be sustained?
After the Chinese government confirmed last year that it would be lifting its ban on game consoles, it became a reality this week. There are still the same hurdles that were highlighted previously, namely that hardware will need to be manufactured in a designated zone and all products will need approval from the country's Ministry of Culture.
Despite a Nintendo spokesman stating that the company is still unsure of its first moves in the potentially lucrative territory's new setup (according to Reuters), the news has reportedly sparked a substantial leap in Nintendo's share prices on the Tokyo Stock Exchange in trading on 8th January. Both CNBC and City Index are reporting an 11% increase in the share value at the close of the day, while a Tokyo-based trader said the following to Reuters.
Nintendo hasn't had a catalyst for a long time, so if it can revive (via) the Chinese consumer market then it would be positive.
As has been the case before, rise and fall in stock price isn't always a reliable indication of fortunes — and the depreciating Yen is also a factor in this jump — but it's certainly a positive for Nintendo that it's a reported two and a half year high. There are challenges, however, as this would be a brand new venture with a major degree of the unknown, stepping into a market and manufacturing system that has largely featured counterfeit and pirated gaming systems in previous years. Nintendo does have the benefit of some experience in China, having previously, through a joint venture, released the iQue home console — which plays ported Nintendo 64 games — and a number of iQue-branded portable systems with limited libraries that go right up to the 3DS.
As one of the most powerful economies in the world — some predict it will become the biggest in the not-too-distant future — China could be a lucrative market, though there is still a substantial demographic in the country earning very low wages. It'll be interesting to see what steps, if any, Nintendo and its rivals take into the territory.