Xiaomi shares dip by 12% in Hong Kong after $3.1b placement

Xiaomi’s shares were halted during the morning session after it had failed to announce the placement in time for the market open. Its stock dropped by nearly 12% yesterday, its biggest dip since its 2018 listing. The company later confirmed it sold shares at HK$23.7 each.

“It may have taken more time to get placement confirmation from investors, delaying the disclosure, […] There’s also pressure from the issuance of convertible bonds – some investors may buy the bond and short the shares in order to get a more fixed income-like exposure to Xiaomi’s convertible bond,” Steven Leung, executive director at UOB Kay Hian in Hong Kong, told Bloomberg.

The Hong Kong stock exchange requires companies to apply for a trading halt if certain inside information has been made public before an official announcement.

Xiaomi’s proceeds from the sale, plus the separate issue of roughly US$900 million in convertible bonds, will help the company strengthen its working capital for business expansion, increase market share, and invest in its strategic ecosystem, as well as be used for general corporate purposes.