Tech

Smartphone maker Xiaomi's shares open 2.9% down on debut in Hong Kong

Smartphone maker Xiaomi's shares open 2.9% down on debut in Hong Kong

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.

A packed initial public offering (IPO) calendar in the coming months will include a $4 billion deal from online food delivery-to-ticketing services platform Meituan Dianping and an up to $10 billion IPO from China Tower, the world's largest mobile tower operator.

"Other IPO candidates will rush to Hong Kong to list before the market sentiment shifts".

Smartphone maker Xiaomi Corp., whose shares will debut in Hong Kong trading Monday, is one of the most-watched tech IPOs since the 2014 flotation of Alibaba Group Holding Ltd. Xiaomi raised $4.7 billion through the issuance of 2.2 billion shares, but the pricing was 23% lower than projected. Shares fell as low as HK$16 a share and were recently at HK$16.82. But some of them may face a bumpy ride amid volatile markets and escalating trade tensions. The market is always open.

Let us know in the comments if you think Xiaomi will do well in the medium and long term in terms of its stock price.

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Today, July 9, was the first day for Xiaomi on the Hong Kong Stock Exchange, with the stock closing at $2.14, giving the Chinese smartphone manufacturer a valuation of almost $50 billion, though it should be noted that this is half the market capitalization of $100 billion that was expected from the IPO. Even though much of the company's revenue comes from smartphones sales, Xiaomi has pinned its hope on internet services to account for most of the profit in the future.

Despite Xiaomi's challenging debut, Reuters notes that Hang Seng - the Hong Kong stock market index - was 1.7 percent higher.

Xiaomi sold 2.18 billion shares, making the IPO the largest in the technology sector since Alibaba Group raised $25 billion in NY in 2014. It is also the first under the city's new rules permitting dual-class shares, common among US tech firms, in an attempt to attract tech sector floats.

But doubts about the sustainability of its business model were among the reasons for the lower valuation, analysts said.