How a 'surprise' China doll is revolutionizing the Hong Kong Stock Exchange

Chinese surprise dolls are shaking up Pop Mart shares. The Chinese toy design company, which has soared nearly 170% so far this year, has fallen in recent sessions on the Hong Kong Stock Exchange after Chinese state media called for stricter regulation of both its toys and its trading.

Chinese media warnings have raised concerns about the wildly popular Labubu doll, manufactured by Pop Mart. According to Bloomberg, while the regional media commentary did not mention Pop Mart by name, retailers have already been alarmed because the warning directly affects the company.

According to an article published in the People's Daily , the flagship newspaper of the Chinese Communist Party, citing legal experts, China should further refine regulations for "blind cards" and "mystery boxes," as some current business models can lead minors to become addicted to buying these products. In fact, the Asian giant prohibits the sale of mystery boxes to children under eight years old.

This is the case with Pop Mart dolls. This toy design company typically sells its dolls in a surprise box, meaning the buyer doesn't know what toy is inside until they open it after purchasing it.

This fear among traders has spread to the stock market in recent days. The toy company, which has a market value of approximately $40 billion, fell 3.62% this Friday, having plunged 5.33% the previous day and 6.04% on June 17.

" The comment has weighed on investor sentiment , showing there are some signs of overheating in the business," Steven Leung, a chief executive of UOB Kay Hian, told the agency. However, the analyst points out that these words do not come "directly from a Chinese government official."

The toy company has seen a nearly 170% increase this year amid the craze for its new surprise doll.

However, this stock market plunge doesn't mask Pop Mart's tremendous performance. The toy company has seen a nearly 170% increase this year amid the craze for Labubu , its new surprise "toothless monster doll."

Despite regulatory risk, a concern among investors, and this week's decline, Pop Mart shares remain the best performers on the MSCI China Index , as consumer craze for its toys has made it one of China's fastest-growing companies. Moreover, Wall Street analysts have been raising their price targets for the company.

Chinese surprise dolls are shaking up Pop Mart shares. The Chinese toy design company, which has soared nearly 170% so far this year, has fallen in recent sessions on the Hong Kong Stock Exchange after Chinese state media called for stricter regulation of both its toys and its trading.