China tech stocks surge after food delivery giant Meituan is hit with $534 million antitrust fine

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  • China’s State Administration for Market Regulation (SAMR) has fined food delivery giant Meituan 3.44 billion yuan ($534.3 million) for abusing its dominant position.
  • Analysts said the fines removed an “overhang” on Meituan and shares of the company rose more than 7% in early Hong Kong trade.
  • Other Hong Kong-listed Chinese giants rose in early trade. Tencent was up about 3% while Alibaba jumped more than 6%.

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GUANGZHOU, China — Shares of Meituan rose more than 7% on Monday, propelled by a rally in China’s technology stocks, the food delivery giant fined as a result of an antitrust investigation.

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on Friday, China’s State Administration for Market Regulation (SAMR) said Meituan abused its dominant position In the country’s online food delivery market. The market regulator said that Meituan prompted traders to sign special cooperation agreements with them and took punitive measures for those who did not.

SAMR fined Meituan 3.44 billion yuan ($534.3 million) and ordered reform measures, ending a month-long investigation.

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In a note on Sunday, investment bank Jefferies said the fines removed the “overhang” on Meituan.

“We believe the SAMR decision addresses market concerns and is communicating with Meituan (MT) authorities and upgrading its business operations,” Jefferies said.

Meituan was up more than 7% in early Hong Kong trade.

The fine is equivalent to 3% of Meituan’s 2020 revenue.

In a separate anti-monopoly investigation, Alibaba was fined $2.8 billion — about 4% of 2019 revenue the e-commerce giant was forced to pay in April as part of an anti-monopoly investigation .

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Other Chinese tech companies listed in Hong Kong also rose in early trade. Tencent was up 3% while Alibaba jumped more than 6%.

Ken Wong, Asia equity portfolio specialist at Eastspring Investments, told Businesshala’s “Street Science Asia” on Monday, “The overall fact is that the Chinese equity markets are certainly … trading more attractive than most other countries in Asia.” Huh.”

“Chinese markets … are trading at very low valuation levels,” he said. “We’re seeing investors fishing the bottom a little bit.”

Wong said any positive sentiment coming from China towards the technology sector should be related to “buying more” of the respective shares.

China has been increasing its scrutiny of domestic technology companies over the past year, wiping away billions of dollars’ worth of tech stocks.

Regulators have focused on toughening rules around unfair competition and data protection, but have gone beyond other jurisdictions by turning their attention to regulating algorithms.

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