Meituan shares reverse losses as investors expect limited impact from China’s antitrust investigation
- Meituan, the fifth-largest stock by weighting on the benchmark Hang Seng Index, closed 2.6 per cent higher at HK$313 on Tuesday
- The State Administration for Market Regulation is investigating whether Meituan forced merchants to pick its platform as their exclusive distribution channel
Shares of Meituan, the country’s largest on-demand delivery service provider, rose as investors expect a limited impact from China’s antitrust investigation into the company over alleged monopolistic business practices.
Meituan closed 2.6 per cent higher at HK$313, reaching its highest level since April 9, after dropping as much as 2.8 per cent in intraday trading to HK$296.40. The fifth-largest stock by weighting on the benchmark Hang Seng Index fell 0.5 per cent on Monday.
Overnight, the company’s American depositary receipts shed 5.8 per cent to US$75.36, after rising 5.3 per cent on Friday to US$80.02 in New York.
“We expect a limited impact on Meituan’s business,” Nomura analysts Shi Jialong and Thomas Shen said in a report on Monday. “We note that POFT (picking one from two) practice helped play a big role in the early days of food delivery competition as it helped differentiate one’s restaurant supplies from those of competitors. We think Meituan’s strong market position and customers’ loyalty has enabled it to outgrow this POFT practice.”
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However, the investigation comes as bad news for shares of Meituan, especially since its stock price has rebounded recently, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.
