HONG KONG (AFP) – Chinese smartphone giant Xiaomi fell on its Hong Kong stock debut yesterday, following a long-awaited initial public offering overshadowed by China-US trade tensions and falling global markets.
Even before public trading started confidence was low, with investors selling at a discount on the unofficial “grey market” last week, Bloomberg News reported.
And yesterday it ended down 1.18 percent at HK$16.80, though that was much better than in mid-morning trade, when it was briefly down almost six percent.
Despite being one of the most anticipated Chinese technology IPOs this year, Xiaomi saw a disappointing valuation of US$54 billion, well below its ambitious US$100 billion target.
Founded in 2010 by entrepreneur Lei Jun, Xiaomi has grown from a start-up in Zhongguancun – China’s “Silicon Valley” – to become the world’s fourth-biggest smartphone vendor at the end of last year, according to International Data Corp.
Mr 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. Its products range from smart home gadgets like air purifiers to non-tech items such as pillows and ballpoint pens.
A delay in Xiaomi’s plan to launch new so-called Chinese Depository Receipts (CDRs) in Shanghai as well as doubts about the sustainability of its business model were also among reasons for the lower valuation, analysts said.
Chinese authorities devised the CDR programme, under which homegrown companies listed abroad can simultaneously list at home, after watching technology heavyweights Alibaba and Baidu launch on Wall Street.
The plan aims to help the development of China’s still relatively immature and volatile share markets.