Shares in China's Xiaomi fall on Hong Kong debut

Shares in China's Xiaomi fall on 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.

The company's lackluster trading start came despite the offer being scaled back and the shares priced at the lower end of their indicated range. Its closing share price for the first day of trading was HK$16.78.

Xiaomi faces nearly 5% share fall in Hong Kong trading debut, indicating a disappointing pricing and a slow start in mainland China.

Xiaomi's trading debut comes at a time when global stock markets have been roiled by the escalating trade clash between the United States and China.

Xiaomi's IPO valued the firm, which also makes internet-connected home appliances and gadgets, at $54 billion, nearly half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.

The smartphone maker was launched 8 years ago. This has resulted in the Hong Kong stock market, Hang Seng, falling to a nine-month low.

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Lei has said that Xiaomi is a "new species" of company, with what he describes as a "triathlon" business model combining hardware, Internet and e-commerce services. "It's open to everybody.If you don't like the price, you can stay away". Most recent floats in Hong Kong dropped below IPO prices.

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.

"The market is really concerned about how much growth Xiaomi can generate in 2019, and whether the company can deliver" on what it pitched to investors, said Hao Hong, chief strategist at Hong Kong-based broker BOCOM International.

After a sizzling 2017, Hong Kong's tech listings are now struggling.

Xiaomi struggled in its debut on the Hong Kong stock market Monday morning, with its shares falling by almost 6 percent. The company is also making waves in Europe, where after less than two years in the market, it has become the fourth biggest smartphone seller.

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