Three stocks, poised for inclusion in the Stock Connect program, experienced a technical delay in their admission due to ongoing share split procedures, creating a window where they were added to the index but not yet accessible to southbound investors.
This delay, coupled with successful retail accumulation following the splits, ultimately culminated in a severe sell-off immediately after their formal inclusion.
Under the clearing and settlement rules for the Stock Connect between the Hong Kong, Shanghai, and Shenzhen exchanges, a temporary stock code is used during a share split, with the old and new codes trading in parallel under separate clearing systems.
The Stock Connect settlement system, however, only supports a single, fixed security code for connection, making it incompatible with the dual-code parallel clearing requirement.
To prevent settlement errors and ensure stability for cross-border fund flows, exchanges postpone the inclusion of such stocks during the code transition window.
Adjustment is only completed after the split is fully settled and a single code resumes trading, thus creating the time lag between index inclusion and Stock Connect admission.
The fundamental data and pre-admission price action of these three companies had already set the stage for this cycle of speculation and subsequent decline.
Statistics show that NUOBIKAN (ASX: 02635) had a modest IPO market cap of just HK$3 billion, raising HK$300 million, indicating a small float and low capital requirement for price movement.
It surged a staggering 700% from its listing to just before its Connect inclusion, exhibiting the most pronounced bubble.
ZHIDA TECH-NEW (ASX: 02650), with a HK$4 billion IPO market cap, rose 183% in the same period.
In contrast, XIDI ZHIJIA, with a larger HK$11.5 billion IPO market cap and thus higher difficulty for speculation, actually fell 5% from listing to pre-inclusion.
However, during the over-month-long anticipation period for its inclusion, it too rallied with the thematic trend, reaching a post-listing high after admission.
Post-Admission Market Performance
The secondary market performance of these three stocks post-inclusion showed a highly consistent pattern of "sell the news" and sharp declines from highs.
All three stocks rallied continuously during the anticipation phase, hitting cyclical or all-time highs around the time of their formal inclusion.
Once southbound capital officially began trading them, the earlier speculative capital concentrated on taking profits and exiting, causing prices to reverse sharply downward.
This left a significant number of retail investors who chased the rally trapped at elevated levels, highlighting a clear case of overbought conditions.
NUOBIKAN was included on April 20th. On that day, frenzied buying at the open pushed its price to a record high of HK$83.2, up 30% intraday from the previous close.
However, with buying momentum faltering and profit-taking intensifying, the gains narrowed drastically, closing up only 7%. After the news was fully priced in, selling pressure was unleashed, causing the stock to plummet 45% in just five trading days post-inclusion.
From a longer-term perspective since its Hong Kong listing, the stock has fallen a cumulative 77%, with a maximum drawdown of 82% from its post-inclusion peak, resulting in severe losses for investors who bought near the top.
XIDI ZHIJIA was included on April 9th, displaying a classic "spike and crash" pattern. It rose a modest 3% on the inclusion day, then continued to rebound over the next five sessions, reaching a cyclical high of HK$40.88.
After this peak, capital concentrated on exiting, leading to a sustained downtrend. By June 16th, its closing price was down 31.4% from its pre-inclusion close, with a maximum drawdown of 58.0% from the peak, causing notable paper losses for high-entry investors.
Although a positive announcement regarding a partnership with a state-owned enterprise triggered a 35.5% surge on June 17th, followed by a 2.3% gain the next day, this only provided a short-term bounce and failed to reverse the overall downtrend from the highs, with the latest price still down 42% from its post-inclusion peak.
ZHIDA TECH-NEW was included on April 10th. On its first day, the stock surged as much as 27.8% intraday, reflecting extreme short-term bullish sentiment, but profit-taking accelerated into the close, leaving it up a mere 0.2% for the day, revealing early divergence.
The rally was completely exhausted after the brief spike. Following a short-lived 22% gain over five days post-inclusion, the stock entered a prolonged downtrend.
By June 18th, it had fallen a cumulative 65% since inclusion, with a maximum drawdown of 77% from its peak, indicating a significant number of investors were left holding the stock at high prices.
Trading Volume Analysis
Trading data shows all three companies experienced a brief but sharp surge in trading activity post-inclusion.
Before inclusion, NUOBIKAN's average daily turnover was only HK$20-40 million, with a turnover rate consistently below 0.3%. In the few days after inclusion until the end of April, its average daily turnover skyrocketed to HK$270 million, and its turnover rate jumped to 2.1%, representing an almost tenfold increase in activity.
XIDI ZHIJIA and ZHIDA TECH-NEW showed similar spikes, with their post-inclusion turnover leaping from HK$10 million to HK$230 million and HK$130 million, respectively, and their turnover rates surging from 0.06% and 0.11% to 1.7% and 1.1%.
However, this heightened activity did not last. Entering May, the average daily turnover for XIDI ZHIJIA quickly fell back to HK$50 million, and for ZHIDA TECH-NEW to HK$110 million, with turnover rates also contracting.
This pattern of "instantaneous volume surge followed by rapid ebbing" clearly indicates that the improved liquidity from inclusion was not used to attract new, long-term capital but rather provided an excellent exit window for investors who had positioned themselves earlier.
Notably, NUOBIKAN's turnover rate remained elevated above 6% throughout May and June, with average daily turnover stabilizing around HK$300 million.
Compared to its pre-inclusion turnover of less than HK$40 million, this represents a significant expansion in trading volume, yet price volatility has noticeably narrowed.
The reason behind this may be related to a clarification announcement issued by the company in May, which alleviated market concerns about potential business implications from financial penalties on an upstream supplier.
Coupled with the significantly lower trading threshold for retail investors after the share split, trapped positions and bargain-hunting capital have been continuously exchanging hands, sustaining high turnover and trading volume.
However, with the earlier speculative bubble largely deflated and a lack of large, one-sided capital inflows to drive the price, the stock has exhibited a unique pattern of sustained high activity with relatively limited price swings.
The Speculative Cycle Unpacked
Analyzing the inclusion process of these three companies reveals a distinct chain of events that fueled the speculative activity.
The first step involved share splits lowering the entry barrier to attract retail investors. All three companies executed share splits, drastically reducing the capital required per board lot.
While the share price adjusted proportionally lower, market expectations for a post-split recovery, combined with the appeal of a lower nominal price, attracted a large number of retail investors to these "pre-Connect" stocks.
The second step was index inclusion followed by a technical delay in Stock Connect admission. Having met the criteria for the Hang Seng MidCap Index by late 2025, they should have been included in the Connect simultaneously.
However, the parallel trading mechanism during the split extended the waiting period. This window of over a month continuously amplified expectations for the inclusion benefit, with retail capital flowing in and pushing prices to cyclical highs.
The final step was the post-inclusion sell-off and price collapse. The actual inclusion marked the complete realization of the thematic narrative, triggering concentrated selling by previously positioned short-term capital.
The first day of inclusion typically saw a pattern of rallying and then retreating. The short-term surge in volume merely represented retail and southbound capital absorbing the profit-taking sell-off, with no long-term capital stepping in to take over.
Subsequently, prices continued to fall sharply, leaving the retail investors who chased the rally at the peak fully trapped.
Note: All data in this article is as of June 18, 2026.
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