Smartphone giant Xiaomi to spend US$1.5 billion in biggest shares buy-back of the year as it joins Li Ka-shing in growing wave of repurchases

Xiaomi plans to spend up to HK$12 billion (US$1.53 billion) on its own shares in what would be the biggest buy-back of the year by Hong Kong-listed companies at a time when the city’s stock market is being rattled by the most serious civic upheaval in more than two decades.

The biggest maker of smartphones in China said it will buy back no more than 10 per cent of the company’s stake in the secondary market, in a statement filed to the bourse on Tuesday.

So far in 2019, CK Asset Holdings, Tencent Holdings and other companies trading in the city have spent at least HK$478 million buying back their own shares amid sell-offs that have sent the Hang Seng Index down by 1.2 per cent since the start of the year. The Hang Seng gauge is the cheapest among the world’s major equity markets, trading at 10.2 times earnings.

“The board believes that a share repurchase in the present conditions will demonstrate the company’s confidence in its own business outlook and prospects and would, ultimately, benefit the company and create value to the shareholders,” Xiaomi said in the statement.

Xiaomi’s shares surged 4.2 per cent to HK$8.70 on Tuesday. Still, the stock remained at almost half its initial public offering price of HK$17.

Xiaomi is the latest to jump on the share repurchases bandwagon. Last month, Hong Kong billionaire Li Ka-shing spent HK$430 million buying back about 7.9 million shares of CK Asset, boosting the interest in his flagship listed company to 33.6 per cent from 33.38 per cent. Chinese social media giant Tencent also spent HK$36 million buying its own shares.

CK Asset has dropped 9.7 per cent this year, while Tencent has gained 4.8 per cent.