Tencent and other gaming stocks tumble after China news outlet labels them ‘spiritual opium’ for teens

The losses came after an article in the Economic Information Daily, which has links to China’s state-controlled news agency, Xinhua, said the gaming industry, especially Tencent, was harming the nation’s teens, according to media reports.

While the South China Morning Post subsequently reported the story has been taken down, investors were rattled by fears that yet another regulatory crackdown could be coming. That’s even as the South China Morning Post pointed out the article didn’t appear to represent Beijing’s position on that industry, noting positive comments from an official recently.

China is the world’s biggest videogame and esports market, according to PwC China, with combined revenue reaching $31.5 billion last year. The revenue share of app-based social and casual games in China is forecast to reach 71.8% of overall videogame revenue by 2025, and a chunk of Tencent’s revenue stems from gaming.

A wave of separate crackdowns on technology companies, including Tencent’s music unit, ride-share giant Didi Global  DIDI, +0.68% and education companies, have been hitting China stocks, as well as their U.S.-listed shares in recent weeks.

Read: Ray Dalio says Chinese stocks still ‘important part’ of a portfolio after crackdown

“After the last few weeks, even oblique warnings from authorities are ignored at your peril, and it seems that regulatory risk is alive and well in China still,” said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA, in a note to clients.

Also: Videogames entered the mainstream for good in the pandemic, but the industry faces a rough transition

Tencent appeared to be responding to the potential threat asit announced online time limits for minors who want to play its games, and said it would ban those under 12 years old from spending any money on those, according to a statement on a WeChat account reported by Bloomberg.