Meituan Hires 10,000, Week In Review

Jul 31, 2023

China Last Night

Asian equities were mostly lower overnight, following the trajectory of US equities from yesterday. China was lower despite the likelihood of another cut to the reserve requirement ratio (RRR), while the People's Bank of China (PBOC) continues to conduct massive capital injections, which have amounted to almost RMB 1 trillion over the past three days.

Following reopening, multiple economic indicators in China have noted an improvement in activity. Inflation has picked up to above 2% and loan demand has increased, sending cash rates higher. These two factors lead me to believe that there will be another RRR cut, which could be beneficial for markets along with other stimulus measures as China digs its economy out from underneath last year's restrictions.

Meituan, a star in the food delivery and local services space, has announced the decision to hire 10,000 more workers, in stark contrast to the layoffs happening in the tech sector in the US. While this announcement sent the stock lower, clearly the company is investing for growth as it competes with Alibaba's Ele.me delivery service and up-and-coming E-Commerce functionality on Douyin, China's version of Tik Tok. We believe that Meituan is well-positioned to stave off these threats to its core delivery empire considering its considerable infrastructure advantage.

The Hang Seng and Hang Seng Tech Indexes were lower by -2.01% and-4.58%, respectively, on volume that increased +2% from yesterday. Utilities and financials were the top-performing sectors in Hong Kong overnight as value factors out paced growth factors. Meanwhile, communication, technology, and consumer discretionary were the worst performing.

Shanghai, Shenzhen, and the STAR Board were lower by -0.30%, -0.44%, and -1.19%, respectively, on volume that decreased -1% from yesterday. Real estate and utilities were the top-performing sectors in Mainland China overnight as value factors outpaced growth factors. Meanwhile, energy and materials were the worst performing.

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