Metaverse Hypes in the Chinese Stock Market
Despite the intensive discussion about the dominance of social media, my view is that they will continue to grow, also in China, where the metaverse is now really gaining momentum.
If one is looking for insight into the latest technological developments, it is a good idea to focus on the United States, typically Silicon Valley, or China, where there are several tech areas. On 21st October last year, a strong signal about one of the current major technological developments was given in Silicon Valley. Facebook changed its name to Meta, which was partially an escape away from a controversial name, though an escape forward. The name change fell in line with a considerable amount of billions of US dollars that Facebook has already invested in the new metaverse technology.
Metaverse can probably be best described as an advanced Virtual Reality (VR) where one can enter the metaverse universe. It can be either as an avatar or as a copy of oneself. Of course, it is most likely that this technology will be the next step in the gaming industry, but I also expect the technology to become a new feature on social media.
Many people are aware of the current features on social media, where a further debated effect is that many users portray their reality as more polished than it might be in real life. With metaverse, life on social media in the future will be a fully designed and polished 3D reality that one steps into. The consequences of this will be heavily discussed, though do I believe that metaverse will become a reality?
Yes, that is my assessment, as the two graphs show the development for only “Augmented Reality” (AR) in the US and globally. AR typically shows a combination of the physical reality as one sees it combined with a virtual world and is typically on mobile phones. Metaverse technology is differently advanced, and it is already well on its way, especially in China.
The latest figure that I have seen is that 75 companies with activities within the metaverse sector are listed in China’s A stock market. As Western investors can access most of the traded A-shares in China, it is now possible to work with metaverse shares in the investment portfolio, I have even come across the first metaverse ETF (Exchange Traded Fund). But before you buy in, I hope you have time to read the rest of this article.
The metaverse development is pointing in different directions, where social media and gaming are already mentioned. Online shopping will be a completely different experience in the future, as in the metaverse world, you can see yourself in the actual clothes or shoes you are considering buying.
Metaverse can also bring the ultimate globalization forward, as digital language translation is now available at an extremely high standard. Even for my own modest company, we get developed an Artificial Intelligence-based “Conversational Business Application”, so we can serve our website visitors in a significantly more advanced way in the future.
If the language translator is connected with speech recognition in a metaverse virtual reality, then people can meet and talk to each other, even without being able speak each other’s languages, it’s possible to participate in classes in any language, or present a product to everyone or anyone who is willing to listen
However, the metaverse development in China has already gone so far, that all kinds of companies are trying to incorporate a reference to the metaverse in their company name just to push up the company’s value. It’s an old and well-known trick around the world, but still worth to be aware of. Even the number of metaverse fraud companies in China has now become so huge of a problem that one of the financial supervisors in China, the China Banking and Insurance Regulatory Commission, has issued a warning about the large number of metaverse fraud companies trying to defraud investors.
However, some of the Chinese companies involved in metaverse technology are serious in trying to prove themselves. Last October, trade association was established under the name Metaverse Industry Committee, where 112 companies or individuals are now represented. China Mobile took the initiative to start the association, but despite that China Mobile is a so-called state-owned company, it does not mean that the state controls the industry association.
There will be an even greater balancing act in China that many investors will consider after last year’s crackdowns on many Chinese tech companies. China wants to be the leading player within the metaverse technology, though in my view, the balance is still that the official China does not tolerate too much dominance from individual companies. It is also possible that the authorities will have an opinion about a too hyped metaverse development if it influences social behaviour too much, which I consider as a “governance risk”.
In the stock market, metaverse is clearly already hyped, and when something hypes in the Chinese stock market, then the volatility becomes quite fierce. An example is Shenzhen Zqgame Co., Ltd. that suddenly rose 300 to 400 pct. within a few months last fall. It is not unique, and the prices can also move at the same pace, though in the opposite direction. The metaverse sector has recently started to find its momentum, but in this confusion of volatility, lack of current regulations, potential upcoming regulations, etc., I am convinced that investors can find exciting growth companies if one is prepared to live with large fluctuations in the share price.
