Tencent’s Earnings Beat Fuels Hope of a China Gaming Rebound

Tencent Holdings Ltd.’s better-than-projected earnings affirmed investor hopes that China’s gaming industry has rounded a corner, though its numbers also revealed a consumer malaise stemming during a stubborn economic downturn.

China’s most valuable company posted a better-than-projected 82% surge in net income, after the summer blockbuster Dungeon & Fighter Mobile helped its core gaming arm bounced back from two successive quarters of decline. That buoyed expectations that China’s $40 billion-plus gaming arena is set for its best showing since a series of regulatory clampdowns chilled a once-thriving pipeline and drove investors to the sidelines.

Investors had been counting on a ...