* MSCI says Meitu did not meet free float requirement
* Meitu shares down 9.09 pct (Adds MSCI comment, detail, updates prices)
By Sijia Jiang
HONG KONG, May 17 (Reuters) - China's Meitu Inc had HK$4.15 billion ($533 million) wiped off its market value on Wednesday after index operator MSCI reversed a decision to include the selfie app maker in the MSCI China Index.
Meitu's Hong Kong-listed shares dived by as much as 10 percent after MSCI said late on Tuesday that the company will not be added to its indices, having announced the previous day that it would add the stock to the MSCI China Index from June 1.
"Following additional analysis and taking into account the 180 days lock-up period for Pre-IPO investors of Meitu, MSCI confirmed that the company was no longer eligible for inclusion to the MSCI Global Standard Indexes as part of the May 2017 Semi-Annual Index Review," an MSCI representative said in an emailed statement to Reuters.
"In particular, the company did not meet the Global Minimum Foreign Inclusion Factor Requirement after the lock-up adjustment."
The MSCI representative declined to elaborate further on the reason for the decision.
The MSCI China index has 149 large and mid-cap constituents with a median market capitalisation of HK$23.35 billion, its website says.
MSCI has various criteria for inclusion, including minimum requirements on the proportion of a stock's shares available for purchase by international investors, known as the foreign inclusion factor (FIF). MSCI generally requires companies to have an FIF of at least 15 percent.
Meitu, which listed in December, had a market capitalisation of HK$42 billion at Wednesday's close. Only about 17 percent of that is in public free float, with the rest of the shares still subject to a lock-in period with trading restrictions.
"We did not contact MSCI and have no comment on its internal decision and action," Meitu said.
"In future, we are committed to developing business operations to create long-term values for shareholders and gain recognition from the market."
The stock's 4 percent gain on Tuesday was erased with a decline of more than 9 percent on Wednesday to close at HK$9.80. That compared with a 0.17 percent fall for the benchmark Hang Seng Index.
Shares of Meitu traded wildly in March when it was included in a stock-connect scheme between Hong Kong and mainland China. ($1 = 7.7868 Hong Kong dollars)
Reporting By Sijia Jiang and Donny Kwok; Editing by Muralikumar Anantharaman and David Goodman