Dual-class shares to Connect in July

Business | Reuters and Tereza Cai 23 Apr 2019

Companies listed with a weighted voting rights structure will be included in Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect in July, Secretary for Financial Services and the Treasury James Henry Lau said.

After a long period of discussion between Hong Kong Exchanges and Clearing (0388) and China Securities Regulatory Commission, both have reached agreements on it, he said.

As for the inclusion of the sci-tech innovation board in the Stock Connect, Lau said they have not talked about this issue this time round. He said out the Stock Connect mechanism is good for RMB internationalization and the capital two-way circulating, adding that it benefits to both Hong Kong and the mainland.

Dual-class shares with weighted voting rights have disappointed the market since listing.

The first such stock, Xiaomi (1810), listed on July 9 in 2018 and has fallen 30.36 percent from the offering price of HK$16.80 to HK$11.70 in less than one year. Food delivery-to-ticketing platform Meituan Dianping (3690) meanwhile has fallen 25.41 percent from its issuing price at HK$74 to HK$55.20.

Earlier this month, Deloitte said it expected to see another one or two companies with weighted voting rights listing in Hong Kong by the end of this year, if the market sentiment is positive with better capital liquidity.

In market news, the SSE Composite Index in Shanghai stock exchange dropped 1.7 percent yesterday to 3,206 points and the cement sector fell significantly.

Also, the SZSE Component Index based on 500 shares in Shenzhen plunged 1.86 percent to 10,224 points.

The combined turnover in the two markets amounted to 804.3 billion yuan (HK$940.41 billion).

The index tracking the listed start-ups fell 1.07 percent to 1,697 points.

The A-share of Petro China and China Petroleum and Chemical grew over 1 percent benefited by the oil price surge as the US is to announce that buyers of Iranian oil need to end imports soon or face sanctions.

The announcement triggered a 3 percent jump in crude prices to their highest for 2019 so far, topping US$74 a barrel yesterday. China is a major importer of Iranian oil and was one of eight buyers who were granted a waiver by the United States to continue buying Iranian oil.

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