Hong Kong and China stocks slip after Xiaomi’s US$4 billion fundraising dents sentiment

Hang Seng Index and Shanghai Composite both slipped 0.1 per cent on Wednesday

Xiaomi recorded its biggest plunge in three weeks, declined 7.1 per cent

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Additional fundraising by Xiaomi, a large cap stock, is affecting market sentiment, leading to declines, an analyst says. Photo: Shutterstock

Published: 11:08am, 2 Dec 2020Updated: 4:57pm, 2 Dec 2020

Hong Kong and China stocks slipped on Wednesday, led by a plunge in the shares of Chinese smartphone maker Xiaomi after it raised US$4 billion in the biggest ever top-up fundraising in Hong Kong.

The Hang Seng Index slipped 0.1 per cent to 26,532.58, after gaining 0.9 per cent on Tuesday. The Shanghai Composite also slipped by a similar margin after its biggest daily gain in three weeks the previous day. The Hang Seng Tech Index dropped 1.7 per cent.

Placements, or additional fundraising, by large cap stocks Xiaomi and BYD affected market sentiment on Wednesday, adding pressure to the Hong Kong and China markets, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.

“Companies with high capital expenditure issue extra shares, especially when stock prices are at relatively high levels. The news will be negative for stock prices, at least in the short term. This will be one of the investment risks for short-term traders [to watch for],” he added.

Xiaomi led losses among blue chips on the Hang Seng Index, sinking 7.1 per cent to HK$24.30, its biggest plunge in three weeks, after its shares resumed trading at 1pm. Trading in its shares was halted in the morning session pending a sale of shares and convertible bonds aimed at raising US$4 billion.

Chinese electric carmaker BYD also announced in an overnight filing that it had submitted an application to the China Securities Regulatory Commission for the issuance of additional shares on the Hong Kong bourse. Its shares plunged 7.9 per cent, their biggest drop in three weeks.

Other technology stocks dropped as well. Chinese food delivery company Meituan-Dianping fell 3.9 per cent, while JD.com declined 2.9 per cent.

Hong Kong and China stocks slip after Xiaomi’s US$4 billion fundraising dents sentiment

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} Hang Seng Index and Shanghai Composite both slipped 0.1 per cent on Wednesday Xiaomi recorded its biggest plunge in three weeks, declined 7.1 per cent

Hang Seng Index and Shanghai Composite both slipped 0.1 per cent on Wednesday

Xiaomi recorded its biggest plunge in three weeks, declined 7.1 per cent