Xiaomi Founder’s $13 Million Share Purchase Sparks Stock Rebound

XIACF -0.96%

Xiaomi Corp. founder Lei Jun

(Bloomberg) -- Xiaomi Corp. founder Lei Jun’s purchase of about HK$100 million ($12.9 million) worth of company stock may help bolster sentiment in the smartphone maker after shares tumbled more than 30% from the July peak.

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The announcement, disclosed late Monday, lifted Lei’s stake to 23.26%, and sent shares rallying 4.4%, the biggest one-day jump in two months. Analysts say the move, which is unusual as it involves the founder instead of just the company, underscores efforts to stabilize the stock and limit downside going forward.

“It’s hard to say whether this will be a concrete bottom, but I would say the signaling that a drop from here is limited is strong,” said Jiang Liangqing, a fund manager at Zhuhai Greenbamboo Private Fund Management.

Xiaomi has a history of well-timed buybacks, executing a number of repurchases since 2022 that ultimately resulted in market gains. In June, a new buyback program announcement and EV model launch helped fuel a rally over the following weeks. Lei’s buyback of 2.6 million shares is in addition to the 21.4 billion shares remaining in order to complete the June buyback program.

The relative cost of hedging against swings in Xiaomi shares has dropped from a high earlier this month, a sign investors may not see the need to pay up for protection. The spread of one-month implied volatility on the stock versus the Hang Seng Tech Index is now around 7.5 points, compared with an average of 11 over the past year.

--With assistance from Cecile Vannucci.

(Updates prices in second graph and adds options volumes in final graph. A previous version corrected the missing unit in the chart.)

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