Hefty fine on Meituan sparks rally in China tech shares

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Hefty fine on Meituan sparks rally in China tech shares

A stock market ticker shows financial gains and losses
Image source: © Embe2006 | Megapixl.com

Highlights 

  1. Shares of Chinese tech giants in Hong Kong have surged.
  2. Meituan leads the surge in Chinese tech shares.
  3. ASX 200 has underperformed its peers in the regional rally.

Shares of Chinese online retail platform Meituan on Monday surged 9.38% as the company led the rally in Chinese tech shares.

The surge in shares came after the food delivery giant was slapped with a fine as a result of an antitrust probe.

Last week on Friday, Chinese ant-trust watchdog State Administration for Market Regulation (SAMR) said that Meituan had abused its dominant position in the country’s online food delivery market. The market regulator alleged that Meituan pushed merchants to sign exclusive cooperation agreements with them and handed out punitive measures for those that didn’t.

The anti-trust body slapped a CNY3.44 billion (US$534.3 million) fine on Meituan and ordered it to carry out rectification measures, concluding a months-long probe.

Analysts believe that the fine would remove the “overhang” of investigation on Meituan. The fine equates to 3% of Meituan’s 2020 revenue.

The Hang Seng Tech Index, which houses most of Chinese tech behemoths, rose by 3.45%. Other Hong Kong-listed Chinese tech companies also rose in early trade. Tencent was higher by 3% while Alibaba jumped more than 9%.

In the broader market, the Hang Seng Index firmed up 2.02%.

In the mainland China, shares traded in the green as well: the Shanghai Composite was up 0.36%, while the Shenzhen Component was trading flat.

Elsewhere in Asia Pacific, Japan shares rallied as well: the benchmark Nikkei 225 was up 1.44%.

Down Under in Australia, the shares underperformed its peers in the region. The benchmark ASX200 was down 0.28% on fears of rising inflation.

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