The Shenzhen and Shanghai stock exchanges have decided that mainland Chinese investors will not be able to buy shares in Hong Kong-listed companies that have super-voting shares and offer ‘stapled’ securities, two or more securities packaged as one that cannot be sold separately.
According to the Wall Street Journal, the decision is a blow to the Hong Kong stock connect scheme, which allows mainland investors to buy shares in companies on the Hang Seng’s main indices, and is particularly bad news for smartphone maker Xiaomi, whose IPO last week got off to a poor start.
Hong Kong may find it more difficult to attract Chinese technology companies to list on the city’s main index in the future, as the opportunity to sell shares to investors on both the mainland and Hong Kong through the stock connect is a significant benefit for companies.