Apple challenger Xiaomi makes lacklustre Hong Kong stock debut

Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut

Xiaomi's shares open 2.9% down on debut in Hong Kong

Xiaomi's IPO raised $4.7 billion at a valuation of about $54 billion - the world's biggest tech or telecom listing since Alibaba (BABA) raised more than $20 billion in 2014, according to data provider Dealogic. The spat pushed Hong Kong's benchmark index to a nine-month low last week.

Xiaomi sold about 2.18 billion shares, making the IPO the largest in the technology sector since Alibaba Group Holding Ltd raised $25 billion in NY in 2014.

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

The Sino-U.S. trade dispute has roiled financial markets, including stocks and currencies, and the global trading of commodities from soybeans to coal over the past several weeks.

One of the reasons that has been floated for Xiaomi's slow start is that investors are generally unsure about the company because of its uniqueness.

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At Monday's closing price the company had a market value of $53.3 billion.

"The market is really concerned about how much growth Xiaomi can generate in 2019, and whether the company can deliver" on what it pitched to investors, said Hao Hong, chief strategist at Hong Kong-based broker BOCOM International. The company pitches itself as going beyond devices to offer internet services, such as video streaming, although it has yet to see significant revenue in the services category. 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. That is far short of the oversubscription rates for other tech IPOs in Hong Kong. "Without the innovation of Hong Kong's capital markets, we wouldn't get a chance to go public in Hong Kong", he said. Most of its sales are in China, but it's growing aggressively in other countries.

The company had grown from a small startup to become the world's fourth-largest smartphone vendor at the end of previous year.

It 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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