By Jiahui Huang

Global gaming stocks sank after Beijing released draft regulations for the online game industry that included restrictions on incentives to play or spend more online.

Shares of Netease, one of China's major online gaming companies, fell some 25%. Tencent, the Chinese tech juggernaut that is also a domestic gaming giant, ended the day down 12%--wiping out $46 billion in market value and representing its largest one-day share loss since October 2022.

In Europe, shares of Prosus, which holds a large stake in Tencent, and gaming giant Ubisoft Entertainment fell sharply, too.

If implemented, the rule could lead to a reduction in player monetization, hitting revenue and profit margins for gaming companies operating in one of the industry's biggest markets, Equita SIM analyst Gianmarco Bonacina wrote in a research note.

France's Ubisoft was down almost 8% in European morning trading.

The rout came after Chinese officials released draft regulations for the online gaming industry. The proposals include limiting users' in-game spending. The proposals also would prohibit minors from tipping hosts who livestream games and would stop companies from offering probability-based lottery services to under-18 users.

Game companies also wouldn't be allowed to set rewards that might encourage more time or money being spent online, including incentives for daily logins, according to the draft rules released by the National Press and Publication Administration.

The agency said it is seeking public comment on the rules until Jan. 22, 2024.

--Adria Calatayud contributed to this article.

Write to Jiahui Huang at

(END) Dow Jones Newswires

12-22-23 0513ET