In the midst of an ongoing gaming crackdown, various state-backed entities within China issued warnings against stocks linked to the metaverse – shared virtual spaces that use various technologies like blockchain and virtual reality.

State-backed media published sharp criticisms against investments in metaverse-linked stocks, suggesting that ambitions of shared virtual spaces have been overstated. 

Investment is not a virtual game and investors buying Chinese stocks hoping to profit from Metaverse will likely end up in tears, according to «Securities Times», the financial newspaper affiliate of «People’s Daily». 

«[If people] blindly invest in such grand and illusionary concept as Metaverse, they will be burnt in the end».

Zhejiang Jinke Culture Industry Co

The published commentary follows one day after a recent letter issued by the Shenzhen Stock Exchange to Zhejiang Jinke Culture Industry Co, urging the company to substantiate claims that it has the customer base to develop metaverse products. 

The Shenzhen bourse also asked if the company played a part in boosting its own stock via metaverse-related interest following a 35 percent surge in its share price this week. 

Separately, China Securities Regulatory Commission chair Yi Huiman told a conference that exchanges should have a better understanding of investor behavior in the internet era earlier this week.

What is the Metaverse?

The metaverse refers to the concept of shared virtual spaces where users can engage in a wide variety of activities beyond just traditional gaming such as shopping online or attending events. 

One such example is popular online game Fortnite which featured a virtual concert by American rapper Travis Scott last year. The performance attracted 12.3 million viewers who witnessed the event live as a virtual character within the game. 

Strong Fan Base

The concept of the metaverse is particularly popular amongst the Chinese. 

According to gaming research firm Newzoo, 78 percent of Chinese consumers age 14-50 are interested in socializing within game worlds, significantly higher than markets like the U.S. (57 percent), Japan (47 percent) and the U.K. (47 percent). Of those interested, 82 percent are positive on the potential benefits of the metaverse.

Other Chinese companies that have shown interest in the metaverse include Shenzhen Zhongqingbao Interaction Network, Wondershare Technology, Wahlap Technology, Goertek, AVIT Ltd and Perfect World which all saw their share prices tumble after the recent warnings.  

Gaming Crackdown

The latest metaverse warnings coincide with an ongoing crackdown against gaming in China.

Last month, Beijing banned individuals aged 18 years or under from playing video games for more than three hours per week. 

Separately, authorities recently summoned gaming firms, including Tencent and NetEase, and ordered them to implement measures that drive innovation rather than engage in «improper completion» such as excessive focus on money or traffic, according to a news agency «Xinhua».