Tencent stock fell 10% on Tuesday after a Chinese news outlet slammed online gaming for its negative impact on children.- The report, linked to China's official press agency, referred to gaming as "spiritual opium" and "electronic drugs."
- This has added to heightened investor concerns over China's regulatory campaign.
Tencent Holdings fell as much as 10% on Tuesday after a Chinese state-run
Shares in rival tech firm NetEase fell as much as 15%, while gaming developer XD Inc fell 21% and mobile-game publisher GMGE Technology Group plunged 16%.
China's Economic Information Daily, run by the country's official state-run press agency Xinhua, said teenage addiction to online gaming is widespread and could have a detrimental impact on young people's education.
The article, which was deleted within a few hours of publication, also reported students playing
"No industry, no sport, can be allowed to develop in a way that will destroy a generation," the article said, according to a Reuters report.
The outlet also called for more measures to control the amount of time children spend on online gaming, and to regularly review game content so that minors are exposed to more limited amounts of "improper" information.
Data showed that 62.5% of minor netizens often play games on the internet, while over 13% of minor mobile gaming users spend an average of over two hours a day on their phone playing, according to the report.
Impact on the sector's fundamentals should be limited as gaming revenues from minors only account for a small percentage of the overall gaming revenue, according to UBS strategists.
"But the latest development has fueled speculation that Beijing could be re-focusing on online gaming after the 2018-19 tightening," UBS said. "This adds to heightened investor concerns over China's regulatory campaign toward the new economy space following its recent overhaul of the after-school tutoring sector."
In 2019, China banned under-18s from playing games between 10 p.m. to 8 a.m. to curb addiction. The country is the largest gaming market in the world as of 2020, according to data from Statista.
Tencent's stock pared losses to close down about 6% after the company announced later in the day it would introduce measures to restrict the time minors can spend playing its games. Playing hours would be cut from 1.5 hours to 1 hour on non-holidays, and from 3 hours to 2 hours on holidays. The new measures will initially apply only to its "Honor of Kings" game.