HKEX agrees to educate China investors about shares with weighted voting rights, pushes up Xiaomi stock

Hong Kong bourse operator Hong Kong Exchanges and Clearing said on Wednesday it had reached an agreement with bourses in Shanghai and Shenzhen to educate mainland investors about shares with weighted voting rights, such as those of Chinese smartphone maker Xiaomi.

HKEX announced a “special stability trading period” and said since mainland investors were not familiar with companies that employed such shareholding structures, there was a “need to consider the maturity and regulatory practices of the two markets when including weighted voting rights companies” in the list of securities eligible for trade through the Stock Connect schemes linking the bourse in Shanghai and Shenzhen with Hong Kong.

A joint working group will be set up to form the rules for including weighted voting rights companies as soon as possible, said the bourse operator. “Details of the special stability trading period are to be worked out by the joint working group and will be announced in due course,” said a HKEX spokeswoman.

Xiaomi will not be traded through the Stock Connects until the working group has worked out all the details, but that did not stop its stock from rising in Hong Kong on Wednesday. Shares in the world’s fourth-largest smartphone company plummeted this week after China temporarily halted trade in its shares by mainland investors.

Its shares rose to HK$22.2 as markets opened, bouncing back from a 9.6 per cent tumble at the beginning of the week. The stock is now just above the HK$22 mark that Xiaomi was seeking during its flotation last month.