Friday, 20 July, 2018

China’s Xiaomi makes underwhelming public debut in Hong Kong IPO

Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut Xiaomi's shares open 2.9% down on debut in Hong Kong
Sandy Mccarthy | 09 July, 2018, 19:40

Chinese smartphone giant Xiaomi has listed in Hong Kong for $4.7bn (£3.5bn), around half the amount the company had said it hoped to raise in a lacklustre listing.

Xiaomi opened at HK$16.60, 2.4% lower than its IPO price of HK$17.

The listing came, however, as escalating trade tensions between the United States and China have shaken markets over the past several weeks.

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%.

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

By contrast, China Literature Ltd, the e-book arm of Tencent Holdings, late past year raised $1.1 billion in its Hong Kong IPO amid heavy demand, with the retail portion being 625 times oversubscribed.

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

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

"We are an internet firm", Xiaomi's founder and chief executive Lei Jun told the listing ceremony at the Hong Kong stock exchange. That is far short of the oversubscription rates for other tech IPOs in Hong Kong.

Asked if the low pricing of some technology firms including Xiaomi will weigh on upcoming IPOs, Hong Kong stock exchange Chief Executive Charles Li said: "We can not put a brake".

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.

Speaking at the ceremonial opening of trading, Xiaomi's chairman Jun Lei acknowledged that the timing of the IPO might not be optimal given the state of trade friction between the U.S. and China.

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

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