He says he can have a negative effect on the mind of a ten-year old, which I read as meaning that he can have a negative effect on the mind of a ten-year old he's attempting to scare. When Luke sees him, at first his jaw drops, then Bats start bullying him, and Luke doesn't react so shabbily for a ten-year old. The older members of the gang, meanwhile, are sitting in shock; one of them is crying. (And for the purpose of the discussion, I think we ought to keep in mind that unlike other children Batman faces, Luke has something to fear of Batman/the law.)