Apple challenger Xiaomi makes lacklustre Hong Kong stock debut

Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut

Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut

China's Xiaomi, the world's fifth biggest seller of smartphones, made an underwhelming public debut after it hit the Hong Kong Stock Exchange amid concerns around an ongoing trade war between the USA and China.

At opening, each Xiaomi share was valued at 16.60 Hong Kong dollars ($2.12), below the initial offering price of HK$17 ($2.17).

China Tower, the world's largest mobile tower operator, has won approval for an IPO that could raise up to $10 billion. Shares fell as low as HK$16 a share and were recently at HK$16.82.

"Trading below the issue price suggested that investors still felt the valuation of the stocks was relatively high compared with Tencent and Apple", Linus Yip, chief strategist at First Shanghai Securities, told Reuters.

The HK$17 price valued the company at 39.6 times 2018 earnings, while iPhone maker Apple is trading at 16 times and Chinese social media and gaming giant Tencent Holdings at 36. That is far short of the oversubscription rates for other tech IPOs in Hong Kong. The market is always open.

Xiaomi's IPO began on Monday in Hong Kong to a fairly slow start, with trade slipping more than 2%, sometimes dropping by 5.88%.


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.

While the company makes more than 90 percent of its revenues from selling smartphones and other devices - through which it offers online services - it has pushed to be viewed as an internet-based company.

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

The company had also expected to split its listing with another offering on mainland China, but cancelled that.

The company is now the biggest smartphone vendor in India and is pushing into European markets including Spain and Russian Federation, though it has lost share in China recently to lower-cost rivals.

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