Meituan reports strong Q4 results amid mixed Asian equity performance

In the early months of 2025, industrial production and retail sales data released in China showed surprisingly robust year-over-year growth, leading analysts to predict that the central bank might delay interest rate cuts. This economic backdrop has been essential in shaping market behavior in the region. Notably, leading companies like Tencent, Meituan, and Pinduoduo released their earnings for the fourth quarter, giving investors key insights into their performance amidst overall market volatility. The data highlighted the disconnection between stock prices and the underlying fundamentals, particularly evident in Meituan's performance. Meituan, a major player in food and restaurant delivery, announced its Q4 financial results after trading hours in Hong Kong. The company's revenue in 2019 stood at RMB 97.53 billion, while its stock traded at HKD 102.5 by the year's end. Observers noted that despite strong fundamentals, the stock market in Hong Kong and Mainland China experienced profit-taking, attributed to a lack of significant market catalysts. The fluctuations in stock prices for companies like BYD, which saw a significant loss of 7.69% following an EU investigation into its plant in Hungary, further illustrate this trend of profit-taking in a market struggling for direction. Despite a tumultuous trading environment, including declines for major companies such as Xiaomi (-3.19%), Tencent (-1.54%), and Alibaba (-3.54%), Meituan's earnings stood out positively. Indices including the Hang Seng and Hang Seng Tech faced losses, with declines of 2.19% and 3.37%, respectively. The trading volume also spiked, increasing by 15% from the previous day, reaching 206% of the 1-year average. Such patterns suggest that investors may be reevaluating risk versus return amid a backdrop of slowing economic activity in the Chinese consumer sector. The performance of various sectors exhibited considerable divergence. Consumer Discretionary, Information Technology, and Materials sectors recorded declines ranging from 1.64% to 3.75%. In contrast, subsectors like construction materials, consumer durables, and apparel showed some resilience despite the overall negative sentiment in the market. The Southbound Stock Connect volumes reached three times their pre-stimulus levels, with Mainland investors making substantial purchases of Hong Kong-listed stocks, indicating a selective optimism among investors despite the bearish market sentiment for many of the larger cap names.