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Shares in Meitu, eponymous owner of the Chinese selfie app, took a nosedive on Tuesday after Hong Kong media reported the territory’s equities regulator had requested trading records for the company three times since its IPO.

Shares closed down 8.6 per cent at HK$14.60, bringing them about 20 per cent lower for the week so far. Tuesday’s dip made the stock the worst performer among components of the Hang Seng Mid Cap Index.

Meitu shares had closed down 11.2 per cent on Monday, tumbling in afternoon trading from a rise of 28 per cent. Volume surged to more than triple the level from the previous session. On Friday, a surge of mainland investment through the Shenzhen-Hong Kong Stock Connect had seen Meitu shares close up 21 per cent.

Reports from local newspapers that Hong Kong’s Securities and Futures Commission had requested trading records for Meitu three time since its IPO may have pulled the rug out from under its stock – if not the broader rally in Hong Kong equities, also driven in large part by mainland investors. The benchmark Hang Seng index was up 0.2 per cent at the morning session’s close on Monday.

However, the SFC sends far more letters requesting records than it actually begins investigations. In its 2015-16 financial year, the watchdog sent 7,997 letters and launched 286 inquiries.

A spokesperson for Meitu said:

So far Meitu, Inc. has not been contacted by regulators in relation to such [an] investigation. We are not in a position to provide any comment.

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