Nintendo Stock Surges on Switch Console After China Sales Approval

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Nintendo

The Japanese company is partnering with Tencent to sell its console in the world's biggest video game market.

Nintendo shares were up more than 15 percent in Friday afternoon trading in Tokyo after its Chinese partner Tencent Holdings received approval to sell its Switch console in the southern province of Guangdong.

Authorities in Guangdong, where Tencent is registered, posted the permission to start distributing the Switch with a test version of New Super Mario Bros. U Deluxe on their website Thursday, according to Reuters.

China brought its 15-year ban on video game consoles to an end in 2015, but Sony's PlayStation and Microsoft's Xbox have struggled to gain significant traction in the huge local market. This was followed by a ban on new video games last year, which was partially lifted in December, with Tencent winning approval for some games at the start of 2019.

Some analysts see more potential for Nintendo's games roster than rivals Sony or Microsoft because of the popularity of properties such as Mario, Zelda and Pokemon in China. Nevertheless, progress in the market is likely to be slow, with new titles needing to be individually approved, and a big backlog in applications that are believed to have built up during last year's ban.

Consoles need approval from the Ministry of Culture and Tourism, while software needs permission from the State Administration of Press and Publication.

China opening up to the Switch is good news for Nintendo, which saw its stock fall sharply in January after it cut its console sales forecast despite a record quarter. Its stock price remains down more than 11 percent over the last 12 months.