(Yicai Global) Dec. 10 -- The Shanghai, Shenzhen and Hong Kong stock exchanges have agreed a detail arrangement for the inclusion of dual-class shares in their respective stock link programs and aim to have rules allowing mainland investors to buy into Hong Kong-listed companies around the middle of next year.
The trio announced the plans in a joint statement yesterday.
Companies with dual-class shares, or weighted voting rights, issue stock with different degrees of voting power -- typically to ensure a company's founders retain control without having to hold the bulk of shares after going public. They are common among tech firms and startups.
Hong Kong changed its rules to allow companies using the structure to list there in April, as it vied to attract lure top tech firms away from the exchanges on the mainland and in the United States. Some saw it as the biggest change in the bourse's 25 year history, but officials on the mainland wanted to keep those stocks out of the Shanghai and Shenzhen-Hong Kong Stock Connect programs, as mainland investors needed time to become familiar with how WVR companies work.
Tech giant Xiaomi and Meituan Dianping, the world's largest on-demand services provider, both listed in Hong Kong following the rule change, and are looking likely to become targets for southbound traders -- those on the mainland who buy into Hong Kong-listed companies -- once the three bourses finalize rules for dual-class share trading.
Shares in both of those companies have tumbled since their initial public offerings. Xiaomi has lost almost 20 percent to date, while Meituan has retreated nearly 22 percent.
Editor: James Boynton