China warning on blind-box toys sends Pop Mart shares tumbling
POP Mart International Group shares slid in Hong Kong after a Chinese state media commentary called for stricter regulation of businesses offering 'blind cards' and 'mystery boxes.'
Shares of the Beijing-based toymaker dropped as much as 6.2 per cent, after tumbling 5.3 per cent on Thursday. Shares in Bloks Group, which sells similar products, fell as much as 7.1 per cent.
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. '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 per cent 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. BLOOMBERG
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