By Chinese technology stocks experienced a drop on Wednesday due to concerns over potential new regulations on smartphone usage by minors. The Cyberspace Administration of China has released a draft set of rules that could have a significant impact on the sector.
According to the proposed rules, daily internet use on smartphones for children between the ages of eight and 16 would be limited to a maximum of one hour. For those aged 16 to 18, the limit would be extended to two hours. Additionally, minors would be prohibited from using smartphones from 10 p.m. to 6 a.m. However, educational and parent-approved applications would be exempt from these restrictions.
The decline in Chinese internet stocks on Wednesday was part of a broader market decline. Pre-market trading showed a 2.7% decrease in American depositary receipts of video game company NetEase (ticker: NTES), a 2.6% decrease in search company Baidu (BIDU), and a 2.6% decrease in Alibaba (BABA).
China has previously implemented measures to regulate internet use among young people, which had a substantial impact on video game stocks in 2021. However, there was hope that Chinese technology companies would face less strict regulation as the government views the sector as a key driver of economic growth. The introduction of these new restrictions suggests that investors should temper their expectations.
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