Chinese tech Stocks continue to be affected by an astoundingly large sale that wiped out hundreds of billions of dollars of market value. Investors continue to digest Beijing’s increasing crackdown on private businesses.
Meituan in Hong Kong closed down 17.7% on Tuesday. This was more than Monday’s 14% loss. It is now the worst food delivery company of all time. Tech giant Tencent? In the meantime, which fell 9% in Hong Kong, was its worst day in almost a decade.
Meituan“s” SlumpThese combined losses have wiped out over $62 billion of the company’s market value since Friday. Chinese regulators released new guidelines Monday calling for higher standards for food delivery workers.
China’s State Administration for Market Regulation stated in a statement that businesses must ensure passengers get at least the local minimum wage, lessen the workload and improve education and training in traffic safety.
Meituan is one of China’s most popular food delivery platforms. It has hundreds of millions of users who make transactions each year on its app. In a Tuesday statement, the company stated that it had “received” and “studied closely” the new rules and would adhere to them.
He said, “We are committed to improving our compliance standards to protect the rights of our shareholders including carriers,” We believe the publication of these guidelines will contribute to the overall health of China’s internet sector.
Meituan shares have plunged more than 34% this year.
Other tech giants’ shares also declined. China’s top two most valued companies have the lowest shares.Alibaba(BABAB) and Tencent(TCEHY), both fell in the last 48 hours. Alibaba closed at 6.4% in Hong Kong Monday and then fell another 6.4% Tuesday-market.
Tencent’s market declines in the last two days have however wiped off more than $100 billion.
The company’s WeChat messaging service announced Tuesday that all new registrations would be suspended until August, despite its falling shares. According to him, the move was due to an upgrade of its security system following “relevant laws or regulations”.
Over the weekend, Tencent was also rescinded by regulators from its plans to purchase China Music Corporation, a streaming music service. Regulators raised competition concerns and noted that Tencent, a Shenzhen-based tech company, has been the leader in the market for a long time.
Tencent stated in a statement that it had “fully” accepted Saturday’s decision and would “strictly adhere to regulatory requirements.” Tencent also stated that it would “fulfill our social responsibilities” and contribute to healthy competition on the market.
A palpable chill
The three tech giants, Tencent, Meituan, and Alibaba, have collectively lost more than $237billion in the last 48 hours.
The Hang Seng TECH Index is a Nasdaq-like index that tracks the largest tech companies in Hong Kong. It fell as high as 8% Tuesday, bucking a regional trend of many major indices.
China’s technology sector has been suffering a severe cold in recent months. Analysts at Goldman Sachs claim that since February, the value of shares in Chinese technology companies has dropped to a staggering $1 trillion.
This is happening as China’s crackdown continues in various sectors. Recently, the Chinese authorities also turned their attention towards private education.
New rules were published this weekend and targeted tutoring firms that are rapidly growing. They will be unable to make a profit or raise funds on stock exchanges. China’s Ministry of Education announced that several large, publicly-held educational companies had lost billions of dollars in market value.
New Oriental Education & Technology (EDU), fell nearly 50% in Hong Kong and then closed down almost 34% in New York.
According to Thomas Chong, a Jefferies analyst, investor concerns might be overblown in some cases. He reiterated Tuesday his recommendation to purchase Meituan shares.
He wrote to customers that the company has been trying to improve passenger conditions for a long time. In fact, they have held about 100 sessions with workers in the past year to get feedback.
Chong added that “we view the stock market pullback on policy details in excess.”
Meituan is being scrutinized by regulators for the second time. China initiated an antitrust investigation into Meituan earlier this year. Authorities were looking into its “exclusive bargaining arrangements”. Officials in April summoned dozens of Chinese technology companies to examine anti-competitive behavior and urged them to do so.
Wang Xing, the founder of Meituan, was also in trouble for a controversial poem he had posted on social media. He later deleted it.