Xiaomi’s weak debut signals trouble for next Hong Kong tech listings

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Shares of smartphone-maker Xiaomi Corp. opened down 2.3% in their trading debut in Hong Kong on Monday and moved downward from there, extending a weak reception for the company from skeptical investors.

According to Dow Jones, The shares of Xiaomi opened down at 16.60 Hong Kong dollars ($2.12) a share which is below the initial public offering price of HK$17 ($2.17).

Xiaomi faces nearly 5% share fall in Hong Kong trading debut, indicating a disappointing pricing and a slow start in mainland China. Analysts said the company had been weighed down by investor concerns about its hefty valuation on the back of an unfolding US-China trade war that poses a huge threat to China's technology companies, as they could find it harder to acquire core technologies from a more hawkish Trump administration.

The 8-year-old company has yet to give details of how that business model will work outside China. It later expanded into computers, TVs and home appliances.

Xiaomi CEO and co-founder Lei Jun acknowledged the unfortunate timing in a letter to employees Sunday that said, "Our IPO also comes with huge challenges and heavy responsibilities". While Xiaomi does not sell its products in America at the moment, the company has said it plans to before the end of next year. Most recent floats in Hong Kong dropped below IPO prices.

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"We are an internet company and from Day 1 we have set up a weighted voting rights structure with dual-class shares", he added.

The soggy debut performance of the company hasn't come as much of a surprise for some analysts.

And while markets still expect Xiaomi to eventually offer CDRs, there's a split in opinion on when that will happen.

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.

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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