Aug 7, 2014 9:05 AM ET
 
China’s government issued rules that restrict the dissemination of politically related news on instant-messaging applications to only authorized media outlets, the official Xinhua News Agency said.
 
Rules tightening management of message applications in the world’s biggest Internet market, such as Tencent Holdings Ltd. (700)’s WeChat, are meant to safeguard national security, according to the report. App providers will also be required to implement more stringent rules on real-name registration for users, the state-run news agency said.
 
China last month blocked messaging applications operated by overseas companies Line Corp. and Kakao Corp. as part of a stepped-up Web-censorship campaign. The message services allow users to communicate with each other through the Internet and are similar to WhatsApp Inc. State interference is one of the primary risks that investors in Chinese Internet stocks such as Tencent and Weibo Corp. (WB) face, according to Cyrus Mewawalla, managing director of London-based CM Research.
 
“The Chinese government is ratcheting up its censorship of the Internet,” Mewawalla said in an e-mail today. “The fate of some of the largest Internet companies is more entwined in politics than ever and that demands investors place higher risk premiums on the sector.”
 
Tencent agreed with the new rules and would help authorities fight the spread of online rumors, according to a statement posted on the Shenzhen-based company’s official Weibo microblog today. Weibo operates a Twitter-like service.
 
Tencent, Asia’s largest Internet company, has closed more than 100 public WeChat accounts, Xinhua reported today. WeChat has almost 400 million active users.
 
Tencent Declines
 
Shares of Tencent declined 3.5 percent, the biggest loss in three months, to close at HK$128.30 in Hong Kong trading.
 
“There are worries that there could be a further crackdown that would hurt the business outlook for WeChat,” said Benjamin Tam, a Hong Kong-based portfolio manager at IG Investment Ltd., which oversees about $1.5 billion.
 
With more than 84 percent of China’s Internet users regularly accessing instant messaging, the flow of information dissemination is undergoing a transformation prompting authorities to expand the scale and depth of regulation.
 
http://www.bloomberg.com/news/2014-08-07/china-tightens-message-app-rules-for-public-information.html