Smartphone maker Xiaomi drops in Hong Kong debut

Smartphone maker Xiaomi drops in Hong Kong debut

Shares of Chinese smartphone maker, Xiaomi, stumbled on their debut in Hong Kong on Monday, opening for trade down more than 2 percent and slipping as much as 5.88 percent during the session. "And they have to speed up the pace if they aim for a good valuation", said Hong Hao, the chief strategist at brokerage BOCOM International. 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.

Analysts say this is partly because Chinese IT firms are likely to be affected by the ongoing trade friction with the United States.

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. "It's open to everybody.If you don't like the price, you can stay away". It raised $4.72 billion from its IPO, making this the world's biggest new technology in four years. Instead, the current valuation of $46 billion essentially means the company's value remains unchanged from its last fundraising round in 2014.

Xiaomi's IPO had been expected to raise up to $10 billion, split between a Hong Kong and a mainland offering, which was postponed last month in a surprise move.

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

Xiaomi Corp.'s market debut has failed to convince investors that it's capable of shedding a reliance on cheap phones and becoming an internet giant.

Global stock markets mostly rose Monday as the British government appeared to turn toward a more trade-friendly version of Brexit and as investors monitored the escalating trade standoff between the US and China.

"We are an internet company and from Day 1 we have set up a weighted voting rights structure with dual-class shares", he added. "Without the innovation of Hong Kong's capital markets, we wouldn't get a chance to go public in Hong Kong", he said.

The tussle over Xiaomi's high valuation and concern over a US-China trade war have overshadowed what had been one of the world's most highly-anticipated initial public offerings of the year.

Xiaomi CEO and co-founder Lei Jun acknowledged the unfortunate timing in a letter to employees Sunday that said, "Our IPO also comes with huge challenges and heavy responsibilities". The deal was led by CLSA, Goldman Sachs and Morgan Stanley.

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