Gaming giants lose $60 billion on China's sermon against profit

Regulators slow down nod for new online games; warning against metaverse stocks, too

Tencent Holdings and Netease shed more than $60 billion of value as investor fears grow that Chinese regulators are preparing to tighten their grip dramatically on the world’s largest gaming industry.
 
Chinese regulators summoned industry executives to a Wednesday meeting to instruct them to break their “solitary focus” on profit and prevent minors from becoming addicted to games, according to the official Xinhua News Agency.
 
Regulators also said China will slow down approvals for all new online games, the South China Morning Post reported on Thursday, updating an earlier report that said there was a freeze on approvals. The reports accelerated a stock selloff that began in the morning, although Xinhua made no mention of the approval suspension. Investors are already on edge because of a ten-month government campaign to rein in industries from e-commerce and ride-hailing to social media.

Xi Jinping’s administration is waging a concurrent campaign to curb addiction among minors, reduce growing spending on virtual items and prod youths toward more productive pastimes. The government just last week released new regulations for the industry, including limiting the amount of time children can play video games to three hours a week.
 
Metaverse warning
 
Separately on Thursday, Chinese state media cautioned investors against blindly buying Chinese stocks hoping to profit from the metaverse, a virtual shared space based on virtual technologies.
 
The commentary by the official Securities Times follows a recent surge in stocks, such as Shenzhen Zhongqingbao Interaction Network and Perfect World that areperceived as developing the metaverse. Shares in related stocks tumbled, with Wondershare Technology falling by nearly 11 per cent.