Xiaomi Suffers Additional Setback in Seeking Dual Listing
(Updated with closing stock price)
Chinese smartphone maker Xiaomi Corp. (1810.HK) took another hit on Monday as China&`#`39;s two major stock exchanges said it would not include the company in its so-called stock connect scheme, linking the exchanges to the Hong Kong exchange.
Xiaomi, which went public just a week ago in Hong Kong, fell as much as 10 percent in early trading before recovering somewhat later in the day. Shares in Xiaomi had fallen to HK $19.40 and closed at HK $21.05, down almost 2 percent.
The drop came after the Shanghai and Shenzhen exchanges said on Saturday they would not apply the stock connect scheme with Hong Kong to include foreign firms or companies with different voting right structures.
Xiaomi was the first company to list in Hong Kong, selling $4.7 billion of shares, after the Hong Kong exchange changed its rules to allow dual-class share structures.
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 connect scheme is intended to link 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.
The decision by the mainland exchanges added to the
woes of Xiaomi in its difficult bid to be a publicly traded company. On
the day of its IPO on July 8, shares
in the company, priced at HK $17 ($2.17), fell quickly to a low of HK
$16 per share before closing at HK $16.80 in Hong Kong. Xiaomi (1810.HK)
raised $4.72 billion with the offering, valuing the company at about
For Xiaomi, as well as the overall tech industry in China, it was a disappointing signal of lagging investor appetite for new issuances. Although the largest offering by a technology company in four years, Xiaomi had originally been hoping to attract as much as HK $22 per share in its planned float of about 2.18 billion shares.
Under its original plan, Xiaomi&`#`39;s valuation could have hit as much as $100 billion. Instead, the current valuation of $46 billion essentially means the company&`#`39;s value remains unchanged from its last fundraising round in 2014.
Xiaomi initially expected to raise up to $10 billion, split between Hong Kong and mainland China, but last month shelved the mainland offering until after listing in Hong Kong.
(Reuters contributed to this article.)