Video games comprise an increasingly massive part of the global entertainment market. Though developers around the world make great games, U.S. and European developers have largely dominated. This year, however, one of the "biggest stories in games may focus on one inspired by a Chinese myth: “Black Myth: Wukong.”":https://chinalastnight.com/2024/08/29/black-myth-wukong-unleashes-global-gaming-frenzy/ Directly inspired by the 15th century novel “Journey to the West,” the game reached 1.4 million players just hours after release, speaking to a growing role for games in China investing.
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The game was produced in part by a team of former Tencent (TCEHY) developers, with the massive entertainment company one of several investors. in “Black Myth: Wukong” developers Game Science. For decades, Chinese games have been overshadowed by Japan’s massive reputation in games, and to some extent South Korea’s, as well. What “Black Myth: Wukong” might indicate, however, is a growing new market for Chinese games in the U.S.
China Investing and Games
That could have notable implications for China investing. Games don’t just require strong developers, but also contribute significantly to demand for computer hardware and software in China, but also in East Asia, broadly.
China ETFs can provide investors with straightforward exposure to firms like TCEHY. For example, the KraneShares CSI China Internet ETF (KWEB ), currently weights TCEHY as its highest-weighted firm. Per ETF Database, KWEB weights the firm at around 11%.
The China ETF charges 70 basis points to track the CSI Overseas China Internet index. KWEB currently sits at around $4 billion in AUM. The fund looks not only for large-cap names like TCEHY, but smaller internet firms. If “Black Myth: Wukong” sparks a growing demand for Chinese games abroad, firms like TCEHY could be worth a watch.
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