Chinese smartphone giant Xiaomi's listing falls flat

Chinese smartphone giant Xiaomi's listing falls flat

Xiaomi struggled in its debut on the Hong Kong stock market Monday morning, with its shares falling by almost 6 percent. Its closing share price for the first day of trading was HK$16.78.

Meanwhile, as per the sources, the broader Hang Seng Index rose 1.32 percent to close at 28,688.50. The shares were trading at HK$16.82 at the lunch break, giving the company a market value of HK$376 billion. A lot of companies that went public in 2017 and 2018 have seen their share prices plummeting and the situation was made worse thanks to the ongoing trade war between China and the U.S.

The soggy debut performance of the company hasn't come as much of a surprise for some analysts.

"At this critical moment in Sino-US trade relations, the global capital markets are continuously changing", he added.

"Although the macro-economic conditions are far from ideal, we believe a great company can still rise to the challenge and distinguish itself", he said.

Compared to Apple's initial public offering way back in 1980, however, Xiaomi's IPO has not been a resounding success.


"The tit-for-tat going on in the political front between the Unites States and China is spilling over, especially in the tech space", said Jake Saunders, an analyst at ABI Research.

Some institutional investors saw bids for the Chinese smartphone maker's shares as low as HK$15.20 (S$2.63) on Thursday with no offers in grey-market trading, according to two people familiar with the matter.

Typically companies are valued on a multiple of profits or sales.

Lei has described Xiaomi as a "new species" of company with what he describes as a "triathlon" business model combining hardware, internet and e-commerce services. "Even though Xiaomi remained to be a very good story, I think the market is at a stage where you have to prove yourself first before the market can give you a good valuation", Hao Hong, head of research at BOCOM International, told CNBC.

Shares of some other tech-related companies that floated recently have been weak in Hong Kong. Meanwhile, ride-hailing company Didi Chuxing and Alibaba-affiliated digital payments firm Ant Financial are also reportedly considering IPOs.

Xiaomi is the biggest smartphone seller in India and is making inroads in Europe. Latin America is also on the horizon.

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