Xiaomi joins Tencent among Hong Kong’s 10 most valuable companies with US$54 billion market cap

Xiaomi’s shares surge after index compilers FTSE Russell and Hang Seng Indexes Company include it in their widely tracked indices

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Xiaomi’s chief financial officer Chew Shouzi (left) and CEO Lei Jun at the company’s listing ceremony at the Hong Kong stock exchange on Monday. The stock will be added to the Hong Kong Composite Index with effect from July 23. Photo: Sam Tsang

Published: 12:45pm, 10 Jul 2018Updated: 11:16pm, 10 Jul 2018

Xiaomi staged a dramatic turnaround on its second day of trading.

The smartphone maker’s market capitalisation surged to HK$425 billion (US$54.2 billion), breaking into Hong Kong’s top 10 companies, after the stock was added to widely tracked the FTSE China A50 Index, and the Hang Seng Composite Index, which could allow mainland investors to buy the stock via the Stock Connect schemes as soon as this month.

Shares of Hong Kong’s first listed company with a dual-class share structure quickly rebounded on Tuesday to as much as HK$19.34. It closed at HK$19. On its debut on Monday, it fell 1.2 per cent below the offer price of HK$17.

“The turnaround was quite surprising as it was just the second day of trading and the fundamental has not changed at all,” said Linus Yip, chief strategist for First Shanghai Securities. “It’s mainly due to short-term capital inflows, after it was added to FTSE and HSCI indexes, prompting some funds to chase it before the additions take effect.”

Yip said the FTSE China A50 Index is tracked by many passive ETFs, which means they will have to rebalance their portfolios to accommodate the change.

The share surge has helped Xiaomi break into Hong Kong’s top 10 most valuable listed companies, a league that includes Tencent Holdings, HSBC, China Mobile, AIA, and China Construction Bank. Xiaomi ranks No 9 at its current market cap, ahead of Bank of China (Hong Kong).