Meituan, Alibaba, JD.com Stocks Rise In Hong Kong As Chinese Regulator Asks Them To Tone Down Aggressive Promotions

Meituan, Alibaba Group, and JD.com jumped on the Hong Kong stock exchange on Monday after a Chinese regulator urged them to tone down their promotional activity, including discounts, in their food delivery operations.

JD shares were up nearly 4%, while Meituan and Alibaba stocks were up around 3%. The rally is likely to push Alibaba (BABA) and JD.com (JD) stocks higher on the New York Stock Exchange and NASDAQ, respectively, when U.S. markets open on Monday.

On Stocktwits, the retail sentiment for both Alibaba and JD was 'extremely bullish' as of the time of writing. BABA’s U.S. shares are up 44% year-to-date, while JD shares are flat.

Bloomberg reported that China's State Administration for Market Regulation summoned the three largest food-delivery firms to a meeting Friday, asking them to promote rational competition and sustainable growth.

The meeting was aimed at further regulating “promotion behaviours,” encouraging “rational competition,” and fostering a “healthy ecosystem and win-win situation for consumers, merchants, delivery riders, and platform operators", the regulator said in an announcement, according to a report in the South China Morning Post.

The development comes amid a high-stakes war in the food-delivery space in China, where companies have taken to undercutting each other with aggressive discounts.

The competition escalated earlier this year when JD.com entered the market. The rivalry intensified after incumbent Meituan and Alibaba's Ele.me rolled out subsidies to keep customers from jumping to rival services.

The directive from the regulator might prompt the companies to cool off the price war, which has led to significant spending and share price depreciation in recent months. Alibaba alone has lost $100 billion in its stock market value since March.

Last month, Alibaba merged its food delivery platform, Ele.me, and online travel agency, Fliggy, into its core e-commerce business to streamline operations.

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