Xiaomi's Weak Debut Signals Trouble For Upcoming Hong Kong Tech Listings

Xiaomi's Weak Debut Signals Trouble For Upcoming Hong Kong Tech Listings

Chinese smartphone maker Xiaomi Corp's shares fell as much as 6 percent on debut in Hong Kong due to valuation concerns, delivering a blow to investor sentiment in the tech sector where peers have lined up listings in the city.

Xiaomi shares opened down at 16.60 Hong Kong dollars, or about $2.08, according to Dow Jones, compared with their offering price of 17 Hong Kong dollars. Shares traded at HK$16.58 apiece as of 3:35 p.m. HK/SIN before closing at $16.80, after slipping as low as HK$16 earlier.

XIAOMI'S debut is off to a bad start even before its shares officially begin trading in Hong Kong on Monday.

The Sino-U.S. trade dispute has roiled financial markets, including stocks and currencies, and the global trading of commodities from soybeans to coal over the past several weeks. It later expanded into computers, TVs and home appliances.

The stock that was made available to retail investors drew orders represented 9.5 times the shares offered, the company said Friday.

The company is convinced that Xiaomi has "infinite growth potential" going forward, as it aims to be one of the world's top three smartphone company within the "shortest time" possible. The stock was at HK$16.88 after the midday break, while the main Hong Kong stock market index was 1.7 percent higher.

Xiaomi, which helped to pioneer the trend for ultra-low-priced smartphones, says it plans to become an equipment-and-hardware brand alongside Apple Inc. Most recent floats in Hong Kong dropped below IPO prices.

"No matter how you look at it, it's too expensive for me", said Francis Lun, chief executive officer at brokerage GEO Securities, drawing comparisons between the price-to-earnings ratio of Xiaomi and Apple. And in an unusual display of transparency, the printed version was then left at the reception desk where reporters signed in for the company's press conference in Hong Kong.

Xiaomi's disappointing offering touted as the biggest tech listing since 2014 and it's unclear how it will affect other high-flying technology firms Hong Kong hopes to line up.

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

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