The Chinese stock market closed near a 14 month old on Christmas day, thanks to a proposed set of rules that triggered a meltdown in the online gaming industry in China.
According to South China Morning Post, the Shanghai Composite Index closed at 2,918.81, which is near the lowest it’s been since 31st October 2022.
Associated Press also reported that since the new online gaming rules were put in effect, Shares in Tencent, China’s largest gaming company, dropped by around 16% before recovering to close at 12% lower, while Tencent’s biggest competitor NetEase lost around 25% of its value.
Tencent and NetEase also had a combined US$63 billion in market value wiped out in a single day due to the proposed regulations.
The draft regulations, which were issued by China’s gaming regulator, the National Press and Publication Administration (NPPA), included regulations such as restricting online gaming from incentivising more playtime with rewards such as daily login rewards, nor can companies incentivise purchases by offering more rewards for more purchases.
This is not the first time China has laid down strict rules to curb gaming, as in 2021, regulators put in place a strict restriction that allowed children to spend only three hours on games a week.
However, due to the severe effects the new regulations had on the stock market, the NPPA has issued a statement that said they are open to revise the draft ruling, and were seeking feedback from companies and players to improve said feedback.
The NPPA also approved 105 new games; the most all year long, in an effort to calm speculation and stabilise the market..
