Tencent Holdings and Meituan Highlight Rising Trends in the Chinese Stock Market

Market Movements as Meituan Co-Founder Cashes Out

A co-founder of the Chinese food delivery giant Meituan sold 2 million of his Hong Kong-listed shares in the company on Monday, cashing out about HK$344 million (US$44.3 million) amid a recent rally in Chinese stocks. Mu Rongjun, an executive director and senior vice-president at the Beijing-based on-demand delivery firm, sold the shares at a price of HK$171.8, according to a disclosure filed to the Hong Kong stock exchange on Thursday. His Meituan stake now stands at 1.02 per cent, down from the 1.06 per cent previously. Mu is worth US$3.4 billion, according to Forbes.

A Surging Market

• Meituan shares rose 3.3 per cent to HK$211.8 in Hong Kong on Friday.
• The stock has rallied 240 per cent since hitting a low in early February.

Company Updates

Mu cut his holdings three months after Meituan announced a plan to buy back shares valued up to US$2 billion. The company stated that the buy-back was not guaranteed in terms of timing, quantity, or price.

Strong Earnings and Market Visibility

Meituan’s second-quarter revenue surged 21 per cent year on year, reaching 82 billion yuan (US$11.6 billion), driven by robust growth in its core local commerce operations focused on food and grocery delivery. Profit jumped 142 per cent to 11 billion yuan for the quarter.

On Thursday, the company announced the issuance of US$2.5 billion in senior notes to professional investors. This includes US$1.2 billion in notes with a 4.5 per cent coupon due in 2028 and US$1.3 billion in notes with a 4.625 per cent coupon due in 2029.

The Rise of the China Dragon ETF

Meituan is seen as one of the Chinese tech stocks to benefit the most from a rebound in domestic consumer spending. A new exchange-traded fund nicknamed “China Dragon,” which tracks major Chinese tech stocks, landed on the US stock market on Thursday. The fund’s components include Meituan, alongside other Chinese tech giants such as Tencent Holdings, PDD Holdings, and Alibaba Group Holding.

Alibaba's Buyback Moves

Separately, Alibaba reported on Wednesday that it bought back 414 million ordinary shares in the quarter ending September 30 for US$4.1 billion. As of September 30, it had US$22 billion remaining in its buy-back programme.