Online food delivery group Meituan led a rout of Chinese technology company shares on Friday, as authorities announced a series of regulatory moves to boost growth while keeping financial risks under control.
Shares in Meituan, the food delivery giant, fell as much as 18% after the state planner issued new guidelines suggesting a cut in fees for restaurants to reduce their business costs as lingering effects of the pandemic curb the country’s service sector.
The National Development and Reform Commission (NDRC) urged “internet platform companies” to further lower the service fees that it charged restaurants in a guidance note issued on Friday.
The aim, the NDRC said, was to reduce the operating costs of restaurants and catering companies.
The planner said internet platforms should particularly offer preferences to areas hit by recent outbreaks.
They should “give preferential service fees to food companies in county-level administrative regions that are high-risk areas in terms of the pandemic”.
Hong Kong-listed Meituan shares pared back some losses to close at HK$188, more than 14.8% down.
Metaverse Warning Hits Tech Stocks
China‘s state planner, the NDRC, issued rules on Friday to promote a faster recovery from the pandemic in the services sector.
It also echoed a warning by the China Banking and Insurance Regulatory Commission against using the metaverse as a tool for illegal fund-raising, saying that some companies were engaging in illegal fundraising, fraud, and virtual real estate speculation.
Investors, entrepreneurs, and established Chinese tech giants have in recent months piled into the trend of the metaverse, described as a virtual shared space that blurs the boundaries between the online and offline worlds.
The regulatory moves come as China‘s technology sector is still smarting from a year-long regulatory crackdown, which has upended once-common industry practices and wiped millions of dollars off share prices.
In contrast, property sector shares jumped by more than 4% on Friday after China‘s finance minister pledged more fiscal support for the economy and an easing of home-purchase down payments in several Chinese cities aimed at reigniting demand.
- George Russell and Jim Pollard with Reuters
This report was updated with new information on February 18, 2022.