Regulator Criticizes JD & Meituan’s Delivery War
6 Min. Read Time
Key News
Asian equities were mixed, as Japan outperformed and the US dollar firmed slightly.
Hong Kong-listed growth stocks had a very strong day, though volumes were light. Southbound Stock Connect accounted for only 17% of Hong Kong turnover. Internet stocks had a good day, as today’s volume leader by value was Tencent, up 0.16%, followed by Alibaba, up 0.52%. Xiaomi gained +4.38% on an analyst upgrade and company comments on their AI efforts.
Hong Kong and Mainland-listed semiconductor stocks had a strong day after the Mainland, STAR Board-listed Cambricon, which gained 2.75%, announced that it will triple its semiconductor output in 2026 to take on Huawei and Nvidia. The announcement lifted the subsector as Semiconductor Manufacturing International (SMIC) gained +3.78% in Hong Kong and +2.79% in China.
Hong Kong healthcare had a strong day, led by biotech. Wuxi Biologics gained +7.09%, Akeso gained +4.4%, WuXi AppTec gained +5.44%, and WuXi XDC gained +7.51%. A factor for both healthcare and biotech, as well as semiconductors, may have been Merck’s acquisition of Celestial AI. Biotech’s adoption of AI has been underreported, in my opinion, as a potential breakthrough could be significant. Mainland media noted developments made by Baiyun Biopharma that were being noted by “international regulatory bodies on clinical trial designs”.
Hong Kong and Mainland-listed robotics companies rose on talk that the US Commerce Department will support the development of US robotics. Horizon Robotics gained +6.79% and UB Tech Robotics gained +3.66% listed in Hong Kong, and Sanhua Intelligent +7.51% in China.
Distressed real estate developer Country Garden announced that creditors and a Hong Kong court approved the restructuring of nine bonds, valued at RMB 13 billion. Considering Bloomberg’s immense coverage of Vanke’s bonds recently, it begs the question of where the headline on this is.
Mainland China had a mixed day as growth outperformed. The STAR Board gained +1.36%, though banks weighed on indexes.
President Xi and President Macron attended and spoke at the China-France Business Council in Beijing. President Xi stated the two countries should focus on “aviation, aerospace and nuclear energy, while tapping into the potential for cooperation in areas including the green economy, digital economy, biopharmaceuticals, artificial intelligence and new energy”.
Premier Li and the State Council held a meeting yesterday on urban and rural development with a focus on raising domestic consumption.
The Financial Times article titled “US halts plans to sanction Chinese spy agency” received some attention outside of China. We’ve been speaking about how US-China relations are on the improvement path, which the article confirms, as “Treasury secretary Scott Bessent complained that he had been blindsided by a White House memo that raised concerns about Alibaba, the Chinese tech group.” The article quotes multiple think tank “experts” on China that are all from defense company funded entities.
IMPORTANT: Now that I have your attention…..After the close, the State Administration for Market Regulation (SAMR) released “Basic Requirements for the Service Management of Food Delivery Platforms" due to “issues such as 'ghost deliveries,' irrational competition, and insufficient protection of the rights and interests of delivery workers in the food delivery industry in recent years”. I’m not seeing this release widely reported, so consider it a China Last Night exclusive.
Beyond work rights, the release states:
“Focusing on platform fees and promotional practices, we will strengthen the regulation of competitive order. We will clarify platform fee rules and management requirements for promotional activities, urge and guide food delivery platforms to simplify fee items and standardize promotional practices, promote transparency in all types of fee information and rationalize promotional rules, and create a fair and orderly market competition environment.”
Remember, JD.com’s entrance into restaurant delivery, challenging Meituan’s dominance, has created a race to the bottom for both companies. To a lesser extent, Alibaba’s Ele.me food delivery unit has destroyed its bottom lines (net income and EPS) and stock prices. Will this stop the disorderly disaster? It's hard to know, but this is the second time SAMR has opined on the matter. Maybe the companies should wise up!
A Mainland media source noted that US-listed Pinduoduo (PDD US) is “China’s internet cash king,” with $42 billion worth of cash on the books, which is partially due to its strong topline growth, combined with a lack of dividends and/or buybacks.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.7% |
| Hang Seng Tech | HSTECH Index | 1.5% |
| Hong Kong Turnover | HKTurn Index | 9.1% |
| Hong Kong Short Sale Turnover | HKSST Index | 25% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 17.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 189.02 |
| China (Shanghai) | SHCOMP Index | -0.1% |
| China (Shenzhen) | SZCOMP Index | -0.1% |
| China (STAR Board) | Star50 Index | 1.4% |
| Mainland Turnover | .chturn Index | -7.2% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.7% |
| Japan | NKY Index | 2.3% |
| India | SENSEX Index | 0.2% |
| Indonesia | JCI Index | 0.3% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | -0.3% |
| South Korea | KOSPI Index | -0.2% |
| Taiwan | TWSE Index | 0% |
| Thailand | SET Index | -0.1% |
| Singapore | STI Index | -0.4% |
| Australia | AS51 Index | 0.3% |
| Vietnam | VNINDEX Index | 0.3% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 72 | 92 |
| Advancing Stocks | 291 | 1428 |
| Declining Stocks | 177 | 3593 |
| Outperforming Factors | Liquidity, Momentum, EPS Revision | Momentum, Liquidity, Growth |
| Underperforming Factors | Low Volatility, Dividend Yield, Value | |
| Top Sectors | Tech, Healthcare, Industrials | Industrials, Tech, Healthcare |
| Bottom Sectors | Materials, Energy | Staples, Communication, Utilities |
| Top Subsectors | Semis, Tech Hardware, Machinery | Construction Machinery, Semis, Motorcycle |
| Bottom Subsectors | Textiles/Apparel, Consumer Services, Commercial/Professional Services | Catering/Tourism, Retail, Daily Chemical |
| Southbound Connect Buys | HK Tracker ETF (Very Large), Xiaomi (Small), Hua Hong Semi, Kuiashou (Tiny) | |
| Southbound Connect Sells | Tencent (Large), SMIC (moderate), Alibaba (Tiny) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.82 |
| Communication Services | 11 | 0.25 |
| Consumer Discretionary | 28 | 0.7 |
| Consumer Staples | 13 | 0.23 |
| Energy | 6 | -0.07 |
| Financials | 25 | 0.91 |
| Health Care | 15 | 2.8 |
| Industrials | 21 | 1.06 |
| Information Technology | 12 | 3.45 |
| Materials | 10 | -0.17 |
| Real Estate | 7 | 0.52 |
| Utilities | 12 | 0.2 |
| Mainland China Listed | 386 | 0.13 |
| Communication Services | 8 | -0.42 |
| Consumer Discretionary | 28 | -0.31 |
| Consumer Staples | 21 | -0.9 |
| Energy | 12 | 0.23 |
| Financials | 66 | -0.17 |
| Health Care | 33 | 0.25 |
| Industrials | 57 | 0.78 |
| Information Technology | 91 | 0.77 |
| Materials | 49 | -0.18 |
| Real Estate | 6 | -0.14 |
| Utilities | 14 | -0.37 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.2 |
| Alibaba HK | 9988 HK Equity | 0.5 |
| JD.com HK | 9618 HK Equity | 0.5 |
| NetEase HK | 9999 HK Equity | 0.1 |
| Yum China HK | 9987 HK Equity | -2.6 |
| Baozun HK | 9991 HK Equity | 1.4 |
| Baidu HK | 9888 HK Equity | 1 |
| Autohome HK | 2518 HK Equity | 0.5 |
| Bilibili HK | 9626 HK Equity | 2.6 |
| Trip.com HK | 9961 HK Equity | 3.9 |
| EDU HK | 9901 HK Equity | -0.6 |
| Xpeng HK | 9868 HK Equity | 1.1 |
| Weibo HK | 9898 HK Equity | 0.4 |
| Li Auto HK | 2015 HK Equity | -0.5 |
| Nio Auto HK | 9866 HK Equity | 0.8 |
| Zhihu HK | 2390 HK Equity | 1.3 |
| KE HK | 2423 HK Equity | 0.7 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.9 |
| Meituan HK | 3690 HK Equity | 2.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 0.2 |
| ALIBABA GROUP HOLDING LTD | 0.5 |
| XIAOMI CORP-CLASS B | 4.4 |
| MEITUAN-CLASS B | 2.3 |
| SEMICONDUCTOR MANUFACTURI-H | 3.9 |
| ZIJIN MINING GROUP CO LTD-H | 1.3 |
| HUA HONG SEMICONDUCTOR LTD-H | 3.1 |
| WUXI BIOLOGICS CAYMAN INC | 7.1 |
| KUAISHOU TECHNOLOGY | 0.1 |
| HORIZON ROBOTICS INC | 7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHEJIANG SANHUA INTELLIGEN-A | 7.5 |
| ZHONGJI INNOLIGHT CO LTD-A | 2.2 |
| ADDSINO CO LTD -A | 8.7 |
| EOPTOLINK TECHNOLOGY INC L-A | 0.3 |
| SUZHOU TFC OPTICAL COMMUNI-A | 7.9 |
| FOXCONN INDUSTRIAL INTERNE-A | -0.5 |
| CAMBRICON TECHNOLOGIES-A | 2.8 |
| ZIJIN MINING GROUP CO LTD-A | 2.4 |
| VICTORY GIANT TECHNOLOGY -A | 2.2 |
| CONTEMPORARY AMPEREX TECHN-A | 1.9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.07 versus 7.06 yesterday
- CNY per EUR 8.25 versus 8.23 yesterday
- Yield on 10-Year Government Bond 1.87% versus 1.85% yesterday
- Yield on 10-Year China Development Bank Bond 1.94% versus 1.92% yesterday
- Copper Price +2.05%
- Steel Price -0.09%
