Tencent and other gaming stocks tumble after China news outlet labels them ‘spiritual opium’ for teens

The losses came aft an nonfiction successful the Economic Information Daily, which has links to China’s state-controlled quality agency, Xinhua, said the gaming industry, particularly Tencent, was harming the nation’s teens, according to media reports.

While the South China Morning Post subsequently reported the communicative has been taken down, investors were rattled by fears that yet different regulatory crackdown could beryllium coming. That’s adjacent arsenic the South China Morning Post pointed retired the nonfiction didn’t look to correspond Beijing’s presumption connected that industry, noting affirmative comments from an authoritative recently.

China is the world’s biggest videogame and esports market, according to PwC China, with combined gross reaching $31.5 cardinal past year. The gross stock of app-based societal and casual games successful China is forecast to scope 71.8% of wide videogame gross by 2025, and a chunk of Tencent’s gross stems from gaming.

A question of abstracted crackdowns connected exertion companies, including Tencent’s euphony unit, ride-share elephantine Didi Global  DIDI, +0.68% and acquisition companies, person been hitting China stocks, arsenic good arsenic their U.S.-listed shares successful caller weeks.

Read: Ray Dalio says Chinese stocks inactive ‘important part’ of a portfolio aft crackdown

“After the past fewer weeks, adjacent oblique warnings from authorities are ignored astatine your peril, and it seems that regulatory hazard is live and good successful China still,” said Jeffrey Halley, elder marketplace analyst, Asia Pacific, OANDA, successful a enactment to clients.

Also: Videogames entered the mainstream for bully successful the pandemic, but the manufacture faces a unsmooth transition

Tencent appeared to beryllium responding to the imaginable menace as it announced online clip limits for minors who privation to play its games, and said it would prohibition those nether 12 years aged from spending immoderate wealth connected those, according to a connection connected a WeChat account reported by Bloomberg.