Following XPeng, Inc.’s (NYSE: XPEV) entry on the Hong Kong stock exchange, the electric vehicle manufacturer will join the exchange’s major index.
What happened was this: After the market closes on July 20, Xpeng announced the company will be added to the Hang Seng Composite Index.
The Hang Seng Indexes Company determined that XPeng matched the “quick entry rule” of several indexes, resulting in its inclusion in the index.
The Hang Seng Composite Industry Index – Consumer Discretionary, as well as the Hang Seng Composite LargeCap Index, the Hang Seng Composite LargeCap & MidCap Index, and the Hang Seng Consumer Goods & Services Index, will all include the company.
XPeng shares began trading on the Hong Kong Stock Exchange’s Main Board on Wednesday under the symbol “9868.” Given the regulatory need for a minimum of two years as a public company for a secondary listing, the company has explored dual primary listing.
The Hong Kong-listed shares will be entirely interchangeable with the NYSE-listed ADSs, according to the business.
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The Reason for Its Importance: The Hang Seng was established in 1969 and has since become the most often quoted gauge of Hong Kong stock market performance. The index is weighted based on free float market capitalisation, with no single component’s index weight surpassing 10%.
The 58 equities that make up the index are divided into four categories: finance, utilities, real estate, and commerce and industry.
Stocks benefit from index inclusion because funds with portfolios that match the index will buy into the stocks to preserve the component stocks’ respective weightings. Due to purchases by index funds and ETFs, the stock will also benefit from greater volume and liquidity.
“The Stock Connect scheme’s essential requirements include inclusion in the Hang Seng Composite Index and principal listing status in Hong Kong,” said Brian Gu, XPeng vice chairman and president.
The Stock Connect plan is a cross-border equities market access initiative that connects Hong Kong with Mainland China.
As a result, this dual-primary listing achieves the company’s long-term strategic goal of being listed in its home region, giving it direct access to Chinese investors who are likely to be XPeng’s customers, according to Gu.
XPeng’s Hong Kong-listed shares closed at 165 Hong Kong dollars in their first session, unchanged from the offer price. The stock fell 8.18 percent to 151.50 Hong Kong dollars on Thursday, owing to concerns about a Chinese government crackdown on domestic companies with international listings.
At press time, XPeng’s NYSE-listed ADSs were down 2.5 percent at $40.37.
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