Chinese tech stocks keep getting slammed with a stunningly massive sell-off that has wiped out hundreds of billions of dollars in market value as investors continue to digest Beijing’s widening crackdown on private enterprise.
Meituan closed down 17.7% in Hong Kong on Tuesday, eclipsing Monday’s massive 14% loss — making it the food delivery firm’s worst two days on record. Tech giant Tencent, meanwhile, dropped 9% in Hong Kong, recording its worst day in about a decade.
Meituan’s plunge — which combined, has wiped out more than $62 billion in market value for the company since Friday — came as Chinese regulators issued new guidelines Monday calling for improved standards for food delivery workers.
China’s State Administration for Market Regulation said in a statement that companies should take steps to ensure that riders make at least the local minimum wage, to reduce the “intensity” of the workload, and to “strengthen traffic safety education and training,” among other measures.
Meituan runs one of China’s biggest food delivery platforms, with hundreds of millions of users making transactions on its app annually. The company said in a statement Tuesday that it had “received and closely studied” the new rules, and would “strictly comply” with them.
“We are committed to improving our compliance standards to protect the rights of our stakeholders, which include delivery riders,” it added. “We believe that the publication of the new guidelines will beneﬁt the healthy development of China’s internet industry as a whole.”
Meituan’s shares have sunk more than 34% so far this year.
Other tech giants’ stocks dropped, too. Shares of China’s two most valuable companies, Alibaba (BABA) and Tencent (TCEHY), slid over the past 48 hours, with Alibaba (BABA) closing down 6.4% in Hong Kong on Monday and falling another 6.4% on Tuesday.
Tencent’s declines over the past two days, meanwhile, have erased more than $100 billion from its market value.
As its shares tumbled, the company’s WeChat messaging platform announced Tuesday that it would suspend all new user registrations until early August. It said the move was related to an upgrade of its security systems, in accordance with “relevant laws and regulations.”
Tencent was also hit by a regulatory order over the weekend to scrap its plan to acquire another music streaming player, China Music Corporation. Regulators cited competition concerns, noting that the Shenzhen-based tech giant has already long been leading the market.
Tencent said in a statement Saturday that it “fully” accepted the decision, and would “strictly follow the regulatory requirements.” It also pledged to “fulfill our social responsibilities and contribute to healthy competition in the market.”
A palpable chill
In total, the three tech giants — Tencent, Meituan and Alibaba — have lost more than $237 billion over the last 48 hours.
The Hang Seng TECH Index, a Nasdaq-like technology index that tracks the largest tech firms trading in Hong Kong, fell as much as 8% on Tuesday, bucking the regional trend among many major indexes.
In recent months, China’s tech industry has suffered a palpable chill. Since February, shares of overseas-listed Chinese tech firms have lost a staggering $1 trillion in value, according to Goldman Sachs analysts.
Now, that is spreading as China’s clampdown continues to ripple across sectors: Chinese officials have lately also turned their attention to the private education industry.
New rules published over the weekend took aim at fast-growing tutoring companies, barring them from turning a profit or raising funding on stock markets. The announcement from China’s Ministry of Education has wiped billions of dollars off the market value of several major, publicly-traded education firms.
New Oriental Education & Technology (EDU) plunged nearly 50% in Hong Kong on Monday, and later closed down almost 34% in New York.
In some cases at least, investors’ concerns may be overblown, according to Jefferies analyst Thomas Chong, who reiterated a recommendation to buy Meituan’s stock Tuesday.
The firm has long been working to improve conditions for riders, even hosting about 100 sessions with workers since last year to collate feedback, he wrote in a note to clients Tuesday.
“We view [the] share price pullback about guidelines details as overdone,” Chong added.
This isn’t the first time Meituan has found itself in regulatory crosshairs. Earlier this year, China launched an antitrust probe into Meituan, with authorities looking into its “exclusive dealing agreements.” The company was also one of dozens of Chinese tech firms summoned by officials in April, which were urged to review and resolve any anti-competitive behavior.
In May, Meituan founder Wang Xing also found himself in hot water over a controversial poem he posted — and then deleted — on social media.
-— CNN’s Hong Kong bureau and Julia Horowitz contributed to this report.