Yahoo Finance China is cracking down on online gaming, and it's scaring investors
China released a draft for new restrictions on online gaming, and it spooked tech investors.
Shares of Chinese gaming firms Netease and Tencent plunged in Asian trading.
In the US, Take-Two, EA, and Microsoft dipped in early trading Friday.
Chinese regulators proposed new restrictions for the online video-game industry, spooking investors exposed to the sector.
In Hong Kong, shares of internet giant Tencent, which has stakes in game developers, closed 12% lower to notch its biggest one-day drop since 2008.
Shares of online gaming competitor Netease also tumbled 25% during Asian trading hours, and the Hang Seng Tech Index dropped 4.37%.
In the US early Friday, Electronic Arts and Take-Two Interactive Software shares slid more than 1%, while Microsoft stock also dipped 0.13%. Microsoft acquired "Call of Duty" publisher Activision Blizzard earlier this year.
Meanwhile, in Paris, shares of the studio behind Assassin's Creed Ubisoft also traded more than 3% lower.
Markets responded swiftly to draft regulations from China's National Press and Publication Administration, the regulator that oversees video games.
According to the Wall Street Journal, its proposal aims to cut users' in-game spending and tipping, while also curbing incentives that could keep users online, such as in-game features that reward daily logins.
In 2022, China was the second-biggest gaming market in the world by total sales, after the US, per the Journal.
The new measures follow a similar crackdown from 2021, when Beijing restricted minors from playing video games during the school week in a bid to curtail what was described as a youth video-game addiction.
And in 2019, the National Press and Publication Administration barred users under 18 from playing between 10 p.m. and 8 a.m.
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