Meituan (美團) has shed more than US$58 billion of its market value over two frenetic trading sessions, after Beijing unveiled sweeping reforms against private-sector companies that darkened the outlook for the world’s biggest food delivery giant.
The Chinese company yesterday slid a record 17 percent in Hong Kong, on top of a 14 percent plummet the previous day. The Tencent Holdings Ltd (騰訊)-backed company, already the target of an antitrust probe with uncertain outcomes, was caught up in a broader sell-off of Internet stocks after China ordered swathes of its US$100 billion private education sector to go non-profit.
The clampdown on the booming industry has shocked seasoned China watchers, prompting a rethink of how far Chinese President Xi Jinping’s (習近平) Chinese Communist Party is willing to go as it tightens its grip on the world’s second-largest economy.
Meituan’s losses deepened after the nation’s powerful antitrust watchdog posted rules late on Monday ordering online food platforms to ensure their workers earn at least the local minimum wage, which appeared to target the sector’s leader.
The Chinese government also asked meal delivery operators to respect the rights of delivery staff, according to a guideline released by seven government agencies including the Chinese State Administration for Market Regulation.
The guidelines were not a surprise, but the timing of their announcement was, Citigroup analyst Alicia Yap wrote. “We do see risks of slower profit growth and push out of near-term margins.”
Meituan’s stock has tumbled more than 50 percent from its peak in February as the company grapples with scrutiny on multiple fronts. The food industry regulations added to a litany of regulatory woes.
Beijing in April announced an investigation into whether Meituan contravened anti-monopoly laws through practices such as forced exclusivity arrangements with restaurants.
The company has also drawn criticism over the way it treats hundreds of thousands of low-income delivery riders, who were put to the test during the COVID-19 pandemic.
Meituan chief executive officer Wang Xing (王興) himself has been warned to keep a low profile, Bloomberg News has reported, after the founder posted a controversial poem that convulsed markets and sparked a social media furor.
Wang has detailed plans to address government concerns about its business practices. Among other things, the company has pledged to work with regulators and improve its compliance standards.
It also promised to provide insurance for millions of its delivery drivers — many of them work as part-time personnel and lack proper employee benefits — and has started to reform its commissions scheme in a move to cut fees for partner restaurants.
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said second-quarter revenue is expected to surpass the first quarter, which rose 30 percent year-on-year to NT$118.92 billion (US$3.71 billion). Revenue this quarter is likely to grow, as US clients have front-loaded orders ahead of US President Donald Trump’s planned tariffs on Taiwanese goods, Delta chairman Ping Cheng (鄭平) said at an earnings conference in Taipei, referring to the 90-day pause in tariff implementation Trump announced on April 9. While situations in the third and fourth quarters remain unclear, “We will not halt our long-term deployments and do not plan to
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
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