ZCZC
BCN-03
HONGKONG-CHINA-TECH-STOCKS
Shares in China’s Xiaomi fall on Hong Kong debut
HONG KONG, July 9, 2018 (BSS/AFP) – Shares of Chinese smartphone giant
Xiaomi fell almost 6 percent in its trading debut in Hong Kong Monday, a
long-awaited IPO overshadowed by the start of a US-China trade war and
bearish investor sentiment.
Shares opened at HK$16.60 ($2.12) in Hong Kong — down from their IPO price
of HK$17.00 — and dived 3.8 percent in morning trading, falling as much as
5.9 percent to HK$16 at one point.
Investors felt a lack of confidence even before public trading started,
selling their shares at a discount on the unofficial “grey market” last week,
Bloomberg News reported.
Despite being one of the most anticipated Chinese technology IPOs this
year, Xiaomi saw a disappointing valuation of US$54 billion, well below its
ambitious US$100 billion target.
Founded in 2010 by entrepreneur Lei Jun, Xiaomi has grown from a start-up
in Zhongguancun — China’s “Silicon Valley” — to become the world’s fourth-
biggest smartphone vendor at the end of last year, according to International
Data Corp.
Lei has described Xiaomi as a “new species” of company with what he
describes as a “triathlon” business model combining hardware, internet and e-
commerce services. Its products range from smart home gadgets like air
purifiers to non-tech items such as pillows and ballpoint pens.
A delay in Xiaomi’s plan to launch new so-called Chinese Depository
Receipts (CDRs) in Shanghai as well as doubts about the sustainability of its
business model were also among reasons for the lower valuation, analysts
said.
Chinese authorities devised the CDR programme, under which homegrown
companies listed abroad can simultaneously list at home, after watching
technology heavyweights Alibaba and Baidu launch on Wall Street.
The plan aims to help development of China’s still relatively immature and
volatile share markets and allow domestic investors to invest in the
country’s big tech champions.
Beijing-based Xiaomi is the first firm in Hong Kong to trade with a
controversial dual-class structure since listing rules were overhauled to
allow weighted voting rights for different sets of shareholders.
Analysts say Hong Kong’s technology listings have struggled in recent
months, deflating investor interest.
“Nothing can help because the sentiment is no good at the moment… Most of
the IPOs listed this year were not that profitable,” said Dickie Wong of
Kingston Securities, adding he does not see any “upsides” until the CDR
listing which would boost interest.
BSS/AFP/HR/0950