Meituan Tumbles After China Asks Delivery Platforms to Cut Fees

John Cheng, Bloomberg News

Food delivery couriers for Meituan gather around motorcycles in Beijing, China, on Wednesday, April 21, 2021. Chinese delivery giant Meituan has raised $9.98 billion from a record top-up placement and a convertible bonds sale as it doubles down on efforts to fight the likes of Alibaba Group Holding Ltd. in newer areas such as online groceries. , Bloomberg

(Bloomberg) -- Meituan shares sank as much as 18% after China issued new guidelines asking food delivery platforms to cut fees for restaurants to reduce business costs.

The food delivery giant’s stock fell by the most since July, dragging down the Hang Seng Tech Index, which tumbled as much as 3.6%. The broader Hang Seng Index fell as much as 1.9%.

Online food delivery platforms were also told to give preferential fees to restaurants in regions hit by the pandemic, according to a statement by the National Development and Reform Commission on Friday.

The new policy comes as investors remain jittery over China’s tech sector following Beijing’s yearlong regulatory crackdowns on private enterprise.

“The knee-jerk reaction shows market fears over China’s regulatory tightening haven’t been completely eradicated,” says Daniel So, a strategist at CMB International Securities. “Overall, the market is expecting more granular regulatory measures to be rolled out this year even though the worst of crackdowns should be over.”

(Updates throughout)