"Games Are Mental Opium" Causes Chinese Gaming Stocks to Plunge

[Asia Economy Reporter Jo Yujin] Chinese state media criticized online games as "spiritual opium," causing Chinese gaming stocks, including Tencent, to plummet simultaneously.

According to the South China Morning Post (SCMP) on the 3rd, Tencent's stock, listed on the Hong Kong Stock Exchange, fell sharply by 10.8% in the morning session, reaching 423.60 Hong Kong dollars.

NetEase, the developer of the shooting game "Halo," also saw a 15.7% drop, and China's major mobile game company CMGE plunged 20.2%.

On the same day, the Economic Information Daily, published by China's state-run Xinhua News Agency, urged strict government regulation, citing some students playing Tencent's "Wangzhe Rongyao" (Honor of Kings) for up to eight hours a day.

The newspaper described online games as "spiritual opium, electronic drugs," criticizing, "No industry or sport should be allowed to develop in a way that destroys a generation."

The sharp decline in gaming stocks reflects investor anxiety that Chinese authorities, who have been imposing comprehensive regulations on fintech, big tech, and private education, may introduce new regulations targeting online games.

Bloomberg reported that investors are selling off gaming stocks amid speculation that Chinese authorities will begin cracking down on the gaming industry following their actions against big tech companies like Alibaba.