Published: Mon, July 09, 2018
Technology | By Christopher Mann

Smartphone maker Xiaomi’s weak HK debut casts shadow on tech listings

Smartphone maker Xiaomi’s weak HK debut casts shadow on tech listings

Shares in Xiaomi, the Chinese mobile phone maker, slid nearly 6% at the start of trading in Hong Kong.

After Xiaomi's IPO in Hong Kong, shares dived nearly 4 percent in morning trading on Monday, falling as much as 5.9 percent at one point.

Trading opened at 16.60 Hong Kong dollars ($2.11) per share, below Xiaomi's offering price of 17 Hong Kong dollars ($2.17).

The listing came, however, as escalating trade tensions between the United States and China have shaken markets over the past several weeks.

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"At this critical moment in Sino-US trade relations, the global capital markets are in constant flux", he said.

The stock that was made available to retail investors drew orders represented 9.5 times the shares offered, the company said Friday. The main Hong Kong stock market index ended 1.3 percent higher.

Apart from tough market conditions, the tepid demand for Xiaomi's offering was also because many potential investors mainly view it as a hardware maker instead of a hardware-plus-internet-services firm as the company calls itself, sources have said. In June, we said that Xiaomi was looking to raise about $5 billion (HK$39.22 billion) from shares, while it didn't meet its goal in the first day of trading, it is over half way there and maybe things will pick up for the unique firm.

The Xiaomi float adds to Hong Kong's $7 billion worth of new listings so far this year.

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"From day one, we've set up a dual-class share structure". Shares fell as low as HK$16 a share and were recently at HK$16.82.

Let us know in the comments if you think Xiaomi will do well in the medium and long term in terms of its stock price.

Lei Jun (center), Xiaomi's CEO with senior vice president Li Wanqiang (left) and executive director Lin Bin (right) ahead of the company's IPO.

Xiaomi focuses on low-cost, high-performance smartphones and touts an innovative business model that features online services, a range of consumer electronics products built by partner firms, and a retail strategy that includes a network of physical stores.

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Xiaomi is the biggest smartphone seller in India and is making inroads in Europe.

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