Shares of Chinese smartphone maker Xiaomi Corp slumped as much as 10 per cent on Monday after China’s stock exchanges effectively ruled it out of inclusion in the stock connect scheme that links the mainland and Hong Kong exchanges.
The Shanghai and Shenzhen exchanges said on Saturday they would not expand the stock connect scheme with Hong Kong to include foreign firms, companies with different voting right structures or so-called “stapled” securities.
The news comes just a week after Chinese smartphone maker Xiaomi became the first company to list in Hong Kong with weighted voting rights (WVR) in a $4.7 billion deal following a historic rule change in the city to allow dual-class share structures.
Shares of Xiaomi fell on Monday as much as 10 per cent to HK$19.40 in early trade but recovered to trade at HK$20.55, down 4.2 per cent. The Shanghai stock exchange said it reached the decision after consulting domestic brokerages and that most investors expressed a lack of understanding of the new types of securities.
The stock connects scheme links mainland markets in Shanghai and Shenzhen with Hong Kong. There are currently 268 stocks listed on the Shanghai-Hong Kong stock connect scheme, and 417 on the Shenzhen-Hong Kong scheme.
