(Yicai Global) March 7 -- Global index compiler MSCI will delete Han's Laser Technology Industry Group from its China benchmarks because overseas investors held in excess of 28 percent of the stock, a level that halts buy orders and approaches China's 30 percent foreign ownership limit.
MSCI will pull the Shenzhen-based laser equipment maker after tomorrow's market close (effective March 11) "in light of potential investability issue for investors due to low foreign room which impacts Stock Connect accessibility," the New York-based company said in a statement.
After being notified by the Shenzhen Stock Exchange, Hong Kong Exchanges and Clearing halted buy orders for Han's Laser through the stock market link per trading rules because the firm's foreign holding exceeded 28 percent, it said on March 5. The first and last stock so suspended was Shanghai International Airport in May 2015. HKEX said it is still taking sell orders for Han's Laser.
Shares of Han's Laser [SHE:002008] fell almost 4 percent today to close at CNY42.44 (USD6.33) each, recovering slightly from a near 5 percent decline after the market opened.
The foreign holding in Midea Group is also approaching the 28 percent threshold. In response, MSCI said it will adjust Midea's index weighting (effective March 11) also due to concern over accessibility. "MSCI will apply an adjustment factor of 0.5 on the Foreign Inclusion Factor," it said in a separate statement.
At the close on March 5, Qualified Foreign Institutional Investors, RMB Qualified Foreign Institutional Investors and investors via the Shenzhen-Hong Kong Stock Connect held 27.29 percent of Midea's mainland traded shares, according to Shenzhen Stock Exchange data.
Today, Midea's shares [SHE:000333] lost just over 3 percent to end trading at CNY47.56.
MSCI said it will further clarify the treatment of Stock Connect securities with low foreign room as soon as practicable.