Tencent shares in Hong Kong fell more than 3 percent on Tuesday morning after Chinese regulators stopped the tech giant from selling a blockbuster video game "Monster Hunter: World" on its distribution platform, WeGame.
The move came less than a week after the game was launched in China on August 8.
A statement posted in Chinese on WeGame's website said the game was no longer being sold because its contents did not meet regulatory requirements.
Tencent added that players who have already bought the game can get a full refund in five business days if they apply for it by August 20. Beyond that date, they can continue to play but there would not be any guarantees that the game would continue to be available over time.
But according to the Financial Times, a source close to WeGame reportedly said the removal was not due to complaints from users, but was instead due to "bureaucratic infighting" in China's new media regulator.
WeGame is Tencent's version of Steam, a popular PC games distribution platform developed by Valve Corporation. In June, Valve said it was partnering with a Chinese developer to bring Steam to the massive Chinese games market, potentially putting it in direct competition with WeGame.
Tencent shares were down 3.71 percent at 11:52 a.m. HK/SIN time versus a 0.84 percent decline on the broader Hang Seng index. The tech giant is set to announce its second-quarter and first-half earnings on Wednesday.
"Monster Hunter: World" was created by Japanese video games publisher Capcom. In the game, players hunt down monsters in various map — they either do that alone or by joining online parties of up to four people. Last month, Capcom said that the game had cumulative sales of 8.3 million copies by the quarter that ended in June. Tencent acquired the license to sell the game to PC users in China.
Last quarter, Tencent's gaming business boosted revenues for the company.
Smartphone games revenues were up 68 percent on-year thanks to titles like "Honour of Kings." Revenues for PC games were flat from a year ago, but Tencent had two major hit games on its portfolio.
The first is "PlayerUnknown's Battlegrounds," or PUBG, a massive multiplayer online game that Tencent has the rights to run in China. Still, regulators have yet to approve monetization of that game.
The other game is "Fortnite," a tournament-style game that is popular in competitive video gaming. While "Fortnite" was developed by Epic Games, Tencent has a large stake in the company.
— CNBC's Cheang Ming, Arjun Kharpal and Reuters contributed to this report.