Chinese smartphone giant Xiaomi's listing falls flat

Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut

Investor demand already appears to be flagging for Xiaomi Corp's (小米) upcoming US$4.7 billion debut, with some institutional investors seeing bids for the Chinese smartphone maker's shares as low as HK$15.20 on Thursday, with no offers in gray-market trading, people familiar with the matter said.

According to Lei Jun, its founder and CEO, Xiaomi is a company that "can do hardware, e-commerce and Internet".

Xiaomi's shares were trading at 16.32 Hong Kong dollars (about $2.08) Monday morning, compared with their offering price of HK$17.

"At this critical moment in Sino-US trade relations, the global capital markets are in constant flux", he said. It later expanded into computers, TVs and home appliances.

However, Xiaomi was still able to secure $4.7 billion United States dollars from institutional investors.

Shares in Xiaomi, the Chinese mobile phone maker, slid nearly 6% at the start of trading in Hong Kong.

And Jackson Wong, at Huarong International Securities, warned there could be repercussions for Hong Kong's IPO outlook, saying a tepid start for Xiaomi would suggest a weak appetite for new listings in the city. Of the 27 billionaires to surface in Asia this year, about a third did so through IPOs in Hong Kong and Shenzhen, the Bloomberg Billionaires Index showed.

Xiaomi's disappointing offering touted as the biggest tech listing since 2014 and it's unclear how it will affect other high-flying technology firms Hong Kong hopes to line up. It is also the first under the city's new rules permitting dual-class shares, common among USA tech firms, in an attempt to attract tech sector floats.

China Tower, the world's largest mobile tower operator, has won approval for an IPO that could raise up to $10 billion. Ping An Healthcare & Technology's May debut flopped after the retail tranche was 600 times oversubscribed.

"We are an internet firm", Xiaomi's founder and chief executive Lei Jun told the listing ceremony at the Hong Kong stock exchange. The main stock market in London opened higher. But Xiaomi, with such tight prices, is especially vulnerable to entry into force of tariffs because several of its suppliers are Americans, starting with ir processors, who buy m from Qualcomm.

Chinese e-commerce site Alibaba raised $25bn in NY in 2014.

Potential investors also struggled to view the company as the internet play it considers itself to be, rather than as a smartphone maker - the lower-margin business that now generates most of its profits, sources said.

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

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