Zhongji Innolight’s buy-back plan worth as much as 8 billion yuan (US$1.2 billion) in the run-up to its offshore listing in Hong Kong may give global investors an anchor for pricing, as the Chinese supplier of US hyperscalers seeks to pre-empt a shaky start to trading in the city. The Chinese maker of optical transceivers used in artificial intelligence (AI) data centres said it would repurchase its Shenzhen-listed shares for between 4 billion and 8 billion yuan, through its own or borrowed funds, it said in an exchange statement on Tuesday night, just two days before Zhongji’s high-profile Hong Kong debut on Thursday. The buy-back came on the heels of a sell-off in Zhongji’s yuan-denominated stock, which was closing in on the offer price of HK$980 for the Hong Kong initial public offering (IPO). A further decline in the onshore stock increases the risk that its Hong Kong-listed shares may dip below the IPO price on the first day of trading, a setback for the company that is banking on an offshore listing to expand its overseas business and build up a corporate image among global investors. “Zhongji’s buy-back plan comes at a sensitive time, namely just ahead of its Hong Kong listing,” said Dai Ming, a fund manager at Huichen Asset Management. “The most plausible reason for doing this is to bolster sentiment before the Hong Kong debut,” he added. “Falling stock prices on the home mainland market would for sure add downside pressure on Hong Kong-listed shares, as overseas investors use yuan-traded stock prices as a reference to price the H shares. By doing so, it may prevent a possible breach of the offer price.” Shenzhen-traded shares of Zhongji rose 4.7 per cent to 951 yuan at the close on Wednesday, rebounding from a sell-off that drove the stock down by 34 per cent from a record high on June 22. The stock fell to a low of 908 yuan on Tuesday, representing a mere 7.5 per cent premium on the company’s Hong Kong IPO price. Zhongji may raise about US$8 billion from the offering, making it the biggest stock sale in Hong Kong since Alibaba Group Holding’s US$12.9 billion flotation in 2019. Alibaba owns the South China Morning Post. The buy-back shares would be used for stock incentives or an employee stock-ownership plan, the company said in the statement. Zhongji also conducted a one-hour call with investors on Tuesday night, calming sentiment by dismissing speculation that the company would have to slash prices of its key products. Before the sell-off, spurred by an unravelling of the global AI trade, Zhongji had remained one of the favourite technology bets on the mainland’s stock markets, with the yuan-denominated stock surging about 15-fold over the past year. The east Shandong province-based company supplies optical transceivers – devices that carry data at high speed through AI data centres – to customers including Nvidia and Alphabet. More than 60 per cent of its revenue came from the US in the first quarter. d to begin scaling