Shares in the Hong Kong-based app maker Meitu surged as markets opened in Asia by over 14%, before correcting slightly, after news that the company had made a USD 40m investment in bitcoin (BTC) and ethereuem (ETH) – a first known investment for major companies in the region.
Per market data, the Hong Kong Stock Exchange-listed firm opened trading high, and peaked at about 9:30 AM local time before correcting to levels below Friday’s close-of-market prices.
Yesterday, the company issued an official release stating that on March 5 it had bought an aggregate consideration of “approximately USD 22.1m and USD 17.9m respectively” in ETH and BTC (ETH 15,000 and just under BTC 380).
Sina reported that the Meitu CEO Cai Wensheng has justified his company’s move in a social media post, claiming that it was made in line with the firm’s own blockchain-related business plans – wording that may yet spike the ire of Chinese policymakers, who have been pushing the line that crypto and blockchain are not necessarily interconnected.
Cai referenced a Chinese proverb about a general who, rather than starve, plucked up the courage to become the first person ever to eat a fearsome-looking crab – a hint, perhaps, that Cai believes other companies in the region may soon follow suit.
And in a bullish statement, the company hinted it could make further moves in the future, claiming in the official announcement that its board had signaled its agreement on the move.
“These purchases were made pursuant to a cryptocurrency investment plan previously approved by the board of directors […] under which the group may make a net purchase of up to USD 100m worth of cryptocurrencies, financed by its existing cash reserves.”
The company acquired ETH “as a preparation to enter the blockchain industry,” while the BTC investment is part of their asset allocation strategy.
The crypto move is unprecedented, and comes as a surprise to many. Although Hong Kong law is much more laissez-faire in nature than in Mainland China, where a crypto crackdown has been in place in September 2017, Meitu is mainly active in the Middle Kingdom, and its de facto center of gravity is China’s Fujian Province, where it was founded.
However, crucially perhaps, the company was incorporated in the Cayman Islands, a fact that in principle could help it avoid a backlash from Chinese regulators.
The company is mainly known for its beauty and skincare apps, including BeautyPlus, but it also develops facial recognition technology and is widely considered in China to be a company that is very much on the up.
At the time of writing (08:32 UTC), BTC trades at USD 49,784 and is down by 2% in a day, trimming its weekly gains to less than 11%. ETH is almost unchanged and trades at USD 1,683. It’s up by 19% in a week.
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