Xiaomi shares fall after mainland bourses block them from Chinese investors in Stock Connect pool

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Xiaomi's founder Lei Jun had wanted to offer shares of his smartphone maker at HK$22 each during its initial public offering last month. He almost made it, until a surprise statement by the Shanghai and Shenzhen exchanges over the weekend caused shares to tumble for the first time in five days. Photo: AP

Published: 10:32am, 16 Jul 2018Updated: 10:44pm, 16 Jul 2018

Xiaomi’s shares fell on the Hong Kong exchange, reversing four consecutive days of advances, as the smartphone maker found itself caught in a turf war between the local bourse and mainland exchanges in their race to be Asia’s fundraising hub for technology companies.

Shares of the Beijing-based company ended Monday’s trading down by 1.9 per cent, after starting the day with a 9.6 per cent tumble. The stock had risen for four straight days last week, and was just short of the HK$22 that Xiaomi had sought for in its initial public offering last month.

In a weekend announcement, the Shanghai and Shenzhen exchanges unexpectedly put a temporary halt on accepting Xiaomi into the pool of eligible shares under the southward tranche of the Stock Connect programmes. That means mainland Chinese investors would not be able to buy or sell Xiaomi’s Hong Kong-listed shares under the cross-boundary investment channel.

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At issue is the inclusion of companies with weighted voting rights (WVRs), or multiple classes of stocks, among the 484 members of the Hang Seng Composite Index.

Xiaomi, the first WVR stock to be listed in Hong Kong after last year’s overhaul of listing regulations to encourage technology start-ups and new economy companies to raise capital in the city, is scheduled to be included in the index on July 23.