The South China Morning Post reported that Beijing had temporarily suspended approvals of new games, further hitting shares in the likes of Tencent and NetEase. Shares in the two companies fell more than eight percent and 13 percent respectively.
The decision to freeze new video game approvals was revealed meeting between Chinese authorities and gaming firms including Tencent Holdings and NetEase, the report citing unnamed sources said, adding that it was not clear how long the suspension would last.
Tencent declined to comment on the gaming approvals while the National Press and Publication Administration, which is responsible for greenlighting game tiles, and NetEase did not react to a request for comment.
Stocks in listed gaming companies had already been battered earlier in the day after state news agency Xinhua reported on the same meeting.
Xinhua said the meeting aimed to ensure the companies implemented strict new rules to curb gaming addiction among minors, including a ban last month on under-18s playing video games for more than three hours a week, but did not mention the suspension of gaming approvals in the report. Xinhua also said that companies were told to "resolutely curb incorrect tendencies such as focusing 'only on money' and 'only on traffic' and change rules and gameplay designs that induce players to indulge".
Both Tencent and NetEase said they would comply with the regulators' requests.
Global and domestic investors have been jolted by an ongoing regulatory squeeze that has sought to root out some of the perceived excesses of the runaway growth in some of China's new economy sectors in recent years.