Shares in China's Xiaomi fall on Hong Kong debut

Shares in China's Xiaomi fall on Hong Kong debut

Shares in China's Xiaomi fall on Hong Kong debut

Xiaomi shares opened at HK$16.60 ($2.12), versus an initial public offering (IPO) price of HK$17, and fell to as low as HK$16.02 in the first hour of trade.

Aside from global market concerns, investors are said to have been unsure of Xiaomi's ecosystem story.

Founded in 2010, Xiaomi was the fifth biggest smartphone maker in the world previous year, according to research firm IDC.

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

Traders will be able to bet on further declines by shorting the stock on its first day of trading, according to the Hong Kong exchange operator.

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.

Still, the performance of Xiaomi was seen as a key test of investor sentiment for what is expected to be a packed IPO calendar in the coming months.

"No matter how you look at it, it's too expensive for me", said Francis Lun, chief executive officer at brokerage GEO Securities, drawing comparisons between the price-to-earnings ratio of Xiaomi and Apple.

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Analysts say this is partly because Chinese IT firms are likely to be affected by the ongoing trade friction with the United States.

At the same time, one of WeDoctor's strongest rivals, Ping An Good Doctor, which is backed by Chinese insurance giant Ping An Insurance Group, has shed about 18 per cent in share prices since its debut on the Hong Kong bourse in May.

Xiaomi CEO and co-founder Lei Jun acknowledged the unfortunate timing in remarks at the Hong Kong stock exchange on Monday morning.

Xiaomi also postponed a plan to offer shares in mainland China, which would have given it access to capital from still more investors.

"From day one, we've set up a dual-class share structure".

Xiaomi's main business is phones, but it also sells a range of other internet-connected devices, including laptops and even smart rice cookers.

"Without the innovation of the Hong Kong capital markets, it would be hard for us to have a chance to list publicly in Hong Kong", Lei said, according to a transcript provided by the company. The deal was led by CLSA, Goldman Sachs and Morgan Stanley.

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