Fiery poem posted by CEO burns Meituan

Meituan (3690) plunged to a seven-month low yesterday after chief executive Wang Xing posted but then deleted a Chinese poem that some saw as a veiled criticism of Beijing's regulators, while other new economy shares fell as 84 apps including those from Tencent (0700) and Baidu (9888) were cited over unauthorized data collection.

Wang, who co-founded Meituan, posted a classical poem about Qin dynasty book-burning by emperor Qin Shi Huang, on Meituan's Faufon.com.

Titled Fen Shu Keng, the poem narrates how book burning and murder harmed the dynasty and how natural barriers like rivers and mountains failed to prevent the dynasty's demise. Though the emperor feared scholars, his book-burning did not prevent Liu Bang and Xiang Yu, who were barely literate, from destroying the Qin. The moral of the poem is that it is useless for a regime to burn books and kill people.

The post drew speculation that Wang was criticizing China's regulators, at a time when the company is under antitrust investigation.

However, Wang deleted it on Sunday and issued a clarification that he used the poem in reference to the company's competitors. He noted how Alibaba (9988) had been focused on its rival JD.com but in the end, Pinduoduo emerged as the bigger threat.

Likewise, Meituan's biggest delivery rival appears to be Ele.me, but it may be a company or model that has not yet discovered which will disrupt the food delivery industry, he added.

Meituan also said Wang's post was to remind its workers to maintain the pursuit of innovation at all times.

A Meituan spokesperson confirmed both posts and declined to comment further.

Meituan fell as much as 10 percent to day-low HK$255 before closing 7.1 percent lower to wipe out about HK$124 billion.

Investors are jittery after business figures who appeared to criticize the government have faced consequences. Wang's rival Jack Ma angered Beijing in October last year by blasting regulators publicly over what he considered to be an antiquated approach to oversight. That speech was followed swiftly by tightened rules over consumer lending, the scuppering of Ant's record US$35 billion initial public offering as well as an antitrust probe into Alibaba.

Meanwhile, the Cyberspace Administration of China said 82 apps including Tencent WeSecure and Baidu Mobile Security were involved in unauthorized data collection, and ordered them to rectify their operations in 15 working days. Operators who fail to complete the rectification within the time limit would be dealt with in accordance with the law, it said.

The Tencent-based online education platform Yuanfudao was fined 2.5 million yuan (HK$2.95 million) by the regulator.

Tencent's share fell 0.83 percent while Baidu's fell 2.09 percent.

However, the market expects the Hang Seng Tech Index ETFs, which are launched by the mainland, will drive up the performance of technology shares. The Dacheng Hang Seng Tech ETF launches today.