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BofA on Asia Gaming: Playing the New AI Growth Cycle — Key Picks

Posted on by Eben@CANSLIM Research
Eben@CANSLIM Research's avatarEben@CANSLIM Research

BofA Securities has turned constructive on the Asia Pacific gaming sector, arguing that supportive Chinese regulation, a deep multi-genre launch pipeline and accelerating AI adoption underpin a new growth cycle across China, Japan, Korea and South East Asia. In a report titled “Asia Gaming: Playing the new growth cycle in the AI world…” dated 09 September 2026, the broker names Tencent, NetEase, Capcom, Krafton and Sea as its key conviction names. The central claim is that AI is currently an enabler of productivity and live operations rather than a substitute for creative game development, with Chinese publishers furthest ahead.

Key Takeaways

  • BofA Securities identifies Tencent as offering the strongest mix of evergreen franchises and pipeline visibility, while NetEase provides greater new-title optionality.
  • China’s National Press and Publication Administration approved 209 domestic games in August 2026, taking cumulative domestic approvals to 1,319 year-to-date, against 1,050 by August 2025.
  • China’s online game industry generated RMB31.1bn in total revenue in July 2026, up 7% year-on-year and 4% month-on-month, with mobile gross billing at RMB23.1bn, up 8% year-on-year and 74% of the mix.
  • BofA expects a structural re-rating of China’s online game sector from 10-15x PE to 20x PE, citing evergreen title longevity, a stable competitive landscape and cheap valuations versus global peers.
  • Overseas revenue from Chinese developers’ in-house games reached US$2.0bn, up 19% year-on-year, as globalisation accelerates.

Lead Analysis: What BofA’s Asia Gaming Report Argues

In a report titled “Asia Gaming: Playing the new growth cycle in the AI world…”, BofA Securities analysts Sachin Salgaonkar, Alex Liu, Yoshitaka Nagao, Jinhan Chun, Pankaj Mehendiratta, Kaushik Gurumurthy, Joanna Du, Shinji Masuda and Takeshi Shimazu argue that the region offers several distinct propositions rather than a single trade. China combines resilient gaming spend, durable evergreen titles and growing overseas revenues. Japan is benefiting from margin expansion driven by recurring revenue streams and stronger IP monetisation. Korea remains a high-monetisation, MMORPG-led market with a strong 2026 launch cycle broadening growth. South East Asia is smaller but fast-growing, with a young population and strong engagement.

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