China Warning on Blind-Box Toys Sends Pop Mart Shares Tumbling
Shares of the Beijing-based toymaker dropped as much as 6.2%, after tumbling 5.3% on Thursday. Shares in Bloks Group Ltd., which sells similar products, fell as much as 7.1%.
China should further refine regulations for 'blind cards' and 'mystery boxes' as some of the current business models easily induce minors to become addicted to purchasing these products, according to a feature story carried on the 19th page of the People's Daily, the flagship newspaper of the Chinese Communist Party, citing legal experts.
'The commentary has weighed on investor sentiment, flashing some overheating signs in its business,' said Steven Leung, an executive director at UOB Kay Hian Hong Kong Ltd. 'Still, it's a mild reminder as it didn't come directly from a government official.'
Even with the slump this week, Pop Mart has still gained about 170% this year, making it the best performer in the MSCI China Index, as consumer fervor for its toys has turned it into one of the hottest Chinese growth companies. Wall Street analysts have been increasing their price targets for the company, citing the growing influence of its intellectual properties.
In China, the government prohibits sales of blind boxes to children under the age of eight due to concern over potential addiction. Before the authorities imposed such guidelines in 2023, regulatory risk was a key concern among investors.
This article was generated from an automated news agency feed without modifications to text.
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