Published: Mon, July 09, 2018
Tech | By

Chinese smartphone giant Xiaomi's listing falls flat

Chinese smartphone giant Xiaomi's listing falls flat

Shares lost about 4 percent in early trading but rebounded to 17 Hong Kong dollars ($2.17) at midday.

Xiaomi's debut comes at a challenging time for Chinese stocks as investor sentiment has been hurt by an escalating trade conflict with the U.S. Last month, Shanghai's key index entered bear-market territory-meaning a 20% drop from its recent high-and Hong Kong's benchmark is down more than 10% from a January peak.

"At this critical moment in Sino-US trade relations, the global capital markets are in constant flux", he said.

Xiaomi's float failed to attract strong interest among investors with the retail tranche gathering demand that was only 9.5 times the number of shares on offer, according to its filing on Friday.

By contrast, China Literature Ltd, the e-book arm of Chinese gaming and social media firm Tencent Holdings, late previous year raised US$1.1 billion for its Hong Kong IPO amid heavy demand, with the retail portion being 625 times oversubscribed. In June, we said that Xiaomi was looking to raise about $5 billion (HK$39.22 billion) from shares, while it didn't meet its goal in the first day of trading, it is over half way there and maybe things will pick up for the unique firm.

Enthusiasm for Xiaomi may have waned because investors are holding out for other big Chinese tech IPOs on the horizon, Hong said.


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

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

Xiaomi made 2.18 billion shares available for purchase and was expected to sell them for between HK$17 ($2.17) and HK$22 ($2.8). "It's open to everybody.If you don't like the price, you can stay away".

So why did Xiaomi's IPO flop?

Xiaomi focuses on low-cost, high-performance smartphones and touts an innovative business model that features online services, a range of consumer electronics products built by partner firms, and a retail strategy that includes a network of physical stores. The company is also making waves in Europe, where after less than two years in the market, it has become the fourth biggest smartphone seller.

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