"Metaverse Is Delusion"... China Stocks Plunge Amid Strong Regulation Warning

"Investors Will Ultimately Lose Money in Tears"
Major Metaverse Companies Like Wondershare See Stock Prices Plummet
Game Companies Also Fall Together... Tencent Down 6%, NetEase Down 7%

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Chinese authorities have warned of regulations on the metaverse industry, cautioning that indiscriminate investments are being made in this sector. At the same time, related stocks fell sharply as authorities summoned officials from domestic gaming companies such as Tencent and NetEase to investigate compliance with regulations.

On the 9th, China's state-run media Security Times stated, "Investors should not recklessly invest in the metaverse business with the sole purpose of chasing profits," adding, "Otherwise, investors will end up crying and losing money."

The media described the metaverse as "a concept that exists only in delusion," and advised, "Investors must clearly distinguish between what is genuine and what is a 'bubble.'"

This report came amid a recent surge in the stock prices of major Chinese metaverse gaming companies, interpreted as the authorities signaling their intention to crack down on the metaverse industry as well.

Following the report, Chinese metaverse-related companies Wondershare Technology and Goertek fell sharply by 10% and 8%, respectively. Perfect World dropped by about 5%.

Meanwhile, after Chinese authorities summoned major gaming companies the previous day to urge compliance with regulations, the stock prices of related companies also declined in the market on the same day.

On the Hong Kong stock market that day, Tencent's stock price traded at HKD 494.60, down as much as 5.7% intraday.

NetEase was priced at HKD 140, down 7%. Bilibili's stock fell 6.6% to HKD 651.50.

Previously, the authorities had introduced stringent gaming regulations last month, banning online gaming for minors under 18 on weekdays and allowing only one hour of play on weekends.

The day before, the authorities summoned major gaming companies to verify whether they had implemented measures related to the weekday gaming ban and urged them to prevent anti-competitive practices.

According to Xinhua News Agency, the authorities demanded that gaming companies curb inappropriate business practices such as "inducing excessive spending" and establish game designs and rules to prevent users from becoming addicted to games.

Tencent and NetEase announced their intention to fully comply with the authorities' requests on the day.