Mainland smartphone maker Xiaomi has said it will launch a HK$10 billion ($1.288 billion) share buyback program, after the company’s shares fell more than 34 percent year-to-date, but the Hang Seng Technology Index rose 2.5 percent over the same period.
According to Reuters news agency, Hong Kong-listed Xiaomi said on March 11 that the company’s board has decided to exercise its authorization to launch a share buyback program.
Xiaomi said in an announcement on the Hong Kong Stock Exchange that it will conduct the proposed share repurchase in accordance with the Company’s Memorandum and Articles of Association, the Listing Rules, the Codes on Takeovers and Mergers and Share Repurchases, the Cayman Islands Companies Law and all applicable laws and regulations with which it is subject.
Xiaomi will announce its annual results on March 24, preceded by a one-month silent period during which listed companies are not allowed to repurchase shares on the Stock Exchange, except in exceptional circumstances.
Xiaomi shares hit a record high of HK$35.9 on Jan. 5 this year, but the company’s shares continued to fall after it was blacklisted by the U.S. Department of Defense on Jan. 14 U.S. Time as a company with ties to the Chinese Communist Party military, hitting a 5-5 month low of HK$20.65 on Tuesday (March 9).
On Nov. 12, 2020, former U.S. President Donald Trump (Trump) signed an executive order to prohibit Americans from investing in securities involving Chinese Communist Party military companies as of 9:30 p.m. EST on Jan. 11, 2021.
On January 14, U.S. time, the U.S. Department of Defense added Xiaomi Group, COMAC and nine other companies to the list of companies involved in the Chinese Communist Party’s military.
According to Caixin News, on the day Xiaomi Group was listed as a company involved in the CCP military, its Hong Kong shares plunged 10% to close at HK$29.3. In the U.S. over-the-counter market, the prices of Xiaomi’s two securities products, XIACF.OTCPK and XIACY.OTCPK, fell 9% and 7%, respectively, and their trading volume on that day was US$7.01 million and US$34.97 million, respectively.
After that, Xiaomi’s share price shocked down, closing Hong Kong shares at HK$21.85 on March 11, down 33.08% from the closing price of HK$32.65 the day before it was included in the list; the two securities products traded in the U.S. over-the-counter market also fell about 35%. Showing that the U.S. ban is not just for the U.S. mainland, Xiaomi’s shares in Hong Kong have also been sold off by U.S. investors.
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