Nintendo Co Ltd shares jumped 17 percent on morning Tokyo trade today, a day after Tencent Holdings Ltd of China won a key approval to start selling the Switch console of Nintendo in the largest video games market of the world.
That is the biggest percentage gain ever since July 2016, when the enthusiasm for Pokemon Go, a Nintendo-backed smartphone game, sent the stock rocketing. The jump last Friday sent the shares to their highest price ever since October and pushed the year-to-date gain to approximately 32 percent.
Overnight, the U.S.-listed shares of Nintendo rose by 12 percent after the Chinese province of Guangdong gave Tencent the go signal to distribute the Switch console with a test version of the “New Super Mario Bros. U Deluxe” game.
It is still unknown when the console may go on sale in China, with the games requiring to clear a separate approval process.
Tencent, the gaming industry leader, is trying to recover from a lengthy game approval freeze in China in 2018. The company is listed in Hong Kong, where the financial markets are closed on Friday for a public holiday.
Gu Tianyi,a market analyst from gaming industry analytics firm Newzoo, said that the freeze resulted in a backlog which “means it is uncertain whether a strong line-up of launch titles can coincide with the hardware launch.”
He said that Tencent will possibly release its own popular titles such as Honor of Kings on the Switch in China. Arena of Valor, the international version of the game, is available overseas on the Switch.
With China dominated by mobile and PC gaming, most analysts hope that the news may lead to Tencent and Nintendo establishing in mobile, where Nintendo has been expanding its range of partnerships.
Previously, the Kyoto-based games maker has been hampered by some regulations that are imposed by China and the search for a partner in its aim to bring the hybrid home-portable Switch console to China, holding back the development of console gaming there.
The shares of Nintendo sold off towards the end of 2018 over the concerns regarding its weakness in its Switch games pipeline. Media reports that said Nintendo will launch a low-price Switch version have helped in bolstering the sentiment in recent weeks.