The inclusion of four stocks with weighted voting rights (WVR) structures in the Southbound Stock Connect scheme has been followed by a broad market decline, revealing structural liquidity differences and a prominent risk of heavy selling pressure for MININGLAMP-W (HKG: 02718) as 85% of its shares are set to become unrestricted.
Strict Entry Requirements Fail to Prevent Decline
Following a rigorous assessment period exceeding 210 days, the four WVR companies—Hesai, MININGLAMP-W, WeRide, and Pony.ai—were added to the Southbound Connect list starting in the second quarter of 2026. Contrary to expectations that inclusion would bring incremental funds and boost share prices, these firms, operating in hot sectors like autonomous driving, lidar, and AI data intelligence, have seen their stock prices come under pressure and trend downward collectively since their inclusion.
The entry criteria for WVR companies into Stock Connect are notably higher, requiring at least 210 days of listing, an average daily market capitalisation of HK$20 billion over 183 trading days, and a total turnover exceeding HK$6 billion. This high bar effectively excludes smaller WVR listings. However, these four companies already met the market cap and turnover thresholds at their IPO stages without needing artificial support, suggesting an absence of speculative pre-inclusion positioning that could lead to a concentrated sell-off post-inclusion.
Despite this, their post-inclusion performance has been weak. For all four, inclusion marked a turning point, with prices either peaking and then falling or declining directly, resulting in significant drawdowns.
Dual-Listings and Lock-up Rules Create Different Risk Profiles
The collective downturn points to factors inherent in the companies' structures and shareholder lock-up arrangements, which have created two distinct types of medium-to-long-term risks.
Hesai, WeRide, and Pony.ai are all dual-primary listed in Hong Kong and the US. This structure can buffer direct selling pressure on their Hong Kong shares, as holders with conversion rights can switch to selling US-listed ADS, which typically offer better liquidity. However, it introduces the risk of cross-market arbitrage. Funds could theoretically buy Hong Kong shares pre-inclusion to attract southbound flows, while simultaneously shorting the US ADS. Post-inclusion, they could sell the Hong Kong shares and cover the US short positions for a dual profit, indirectly increasing selling pressure on the Hong Kong stocks.
MININGLAMP-W stands apart as the only non-dual-listed company among the four. Its IPO cornerstone investors and pre-IPO shareholders are subject to a 270-day lock-up, longer than the standard 180 days. This was designed to prevent selling before the Stock Connect inclusion window. However, this strategy merely postpones the selling pressure. The lock-up for these shareholders expires on July 31, 2026, releasing 1.24 billion shares, representing 85.4% of the company's total equity. With the stock already down 36% from its post-inclusion high, the incentive for these locked-up investors to sell may be heightened.
Liquidity Trends Show Clear Divergence
While inclusion is generally expected to boost trading activity, the liquidity performance of these four stocks has diverged sharply, with some seeing a decline.
Hesai has maintained the best post-inclusion liquidity, with an average daily turnover of around HK$200 million and a daily turnover rate of about 1%, yet its share price has still fallen 26%. MININGLAMP-W has seen its average daily turnover rise to HK$160 million with a 0.52% turnover rate post-inclusion, but this short-term boost faces uncertainty ahead of the massive July unlocking. Pony.ai's post-inclusion average daily turnover has stabilised at HK$100 million, matching pre-inclusion May levels but down significantly from a peak of HK$200 million in February.
WeRide presents the clearest case of deteriorating liquidity. Its average daily post-inclusion turnover is only HK$40 million, lower than most pre-inclusion months, with its turnover rate also declining. This suggests that after short-term speculators exited, the influx of new southbound capital was insufficient to fill the gap.
Imminent Unlocking Turns Liquidity into an Exit Route
The current share price pressure stems from multiple factors, but for now, the impending share unlock is the most direct and quantifiable risk.
The cornerstone lock-ups for Hesai and Pony.ai were the standard 180 days and expired before their formal inclusion, with potential selling pressure also diffusable via US markets. WeRide had no cornerstone investors. These three face no immediate large-scale selling risk.
The situation for MININGLAMP-W is entirely different. The unlocking of 85.4% of its shares, worth approximately HK$26.2 billion, on July 31 presents a massive overhang. Even with its improved post-inclusion average daily turnover of HK$160 million, the market's capacity to absorb such a large supply is questionable. A concentrated sell-off could easily trigger a sharp price decline.
This dynamic mirrors other stocks that have fallen sharply upon inclusion. When the Stock Connect inclusion window coincides with a major unlocking event, the short-term liquidity boost from inclusion can provide a perfect exit channel for long-locked-up capital. Without significant fundamental news to shift market sentiment, short-term trading flows are unlikely to absorb such massive selling pressure, making a price reversal difficult.
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