Yesterday after (Hong Kong) market close, China’s State Administration for Market Regulation (SAMR – by now you should be very familiar with them) announced that they were launching an anti-trust investigation on Meituan.

In the Momentum Works community, someone pointed out “the share price will probably slide tomorrow morning” upon learning the news, while another person said “well, finally this becomes certain. The price shall rise.”

This is what happened today:

A few securities firm issued reports expecting limited impact on Meituan’s business. SAMR has made it clear that the probe is on forcing merchants to choose side, the exact offence for which Alibaba was recently fined close to $2.8 billion.

Ultimately it is good to have this certainty (of fine that is within a defined range) than having to second guess what might happen.

Alibaba’s shares surged when the fine (for exactly the same violation) was determined and announced.

As mentioned a few times, we believe firmly that it is not in Chinese government’s interest to harm or break down big techs.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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