China’s stock market remained volatile, hovering close to a 13-month low on Christmas Day, with the Shanghai Composite Index registering a marginal decline to 2,914.65, nearing its lowest level since November 2022. The CSI 300 Index, on the other hand, saw a modest 0.1% gain during the session.
The downward trend was particularly pronounced in the online gaming sector, where a sell-off extended into its second day despite efforts by the industry regulator to alleviate investor concerns. Giant Network Group and 37 Interactive Entertainment Network Technology Group experienced a 10% decline, reaching the daily limit imposed by the exchange. Similarly, Kingnet Network witnessed a 10% drop to 9.85 yuan.
The sector’s decline triggered a draft ruling issued by China’s National Press and Publication Administration over the weekend, aimed at soliciting feedback from companies and players to enhance and revise the proposed regulations. This move follows the significant market value wipeout on Friday, affecting industry giants Tencent Holdings and NetEase, which collectively lost $63 billion in a single day.
Analysts, including Zhang Liangwei from Soochow Securities in Shanghai, emphasized that the regulator intends to foster the prosperous and healthy development of the industry rather than restrain it. The draft ruling is subject to revision based on feedback, highlighting its preliminary nature and the importance of monitoring updates from stakeholders involved. Despite the regulatory turbulence in the gaming sector, the National Press and Publication Administration announced the approval of 105 games on Monday, including titles operated by Tencent and NetEase.
China’s stock market, among the worst-performing globally in 2023, faces broader challenges this year. The Shanghai Composite has experienced a 5.7% decline, while the CSI 300 dropped by 14%. Concerns about the sustainability of China’s economic recovery post-COVID-19, coupled with challenges in the property market and fiscal stress on local governments, contribute to the market’s struggles.
Investors remain watchful for developments and feedback regarding the gaming sector regulations as the market navigates these uncertainties in the coming sessions.
