Smartphone maker Xiaomi debuts on Hong Kong stocks

Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut

Its shares began trading at HK$16.6 (US$2.12), down 2.4 percent from the initial offer price of HK$17 (US$2.16), before closing at HK$16.8 (US$2.14) in what was Xiaomi's first full day as a public entity. "Even though Xiaomi remained to be a very good story, I think the market is at a stage where you have to prove yourself first before the market can give you a good valuation", Hao Hong, head of research at BOCOM International, told CNBC.

The Xiaomi float adds to Hong Kong's $7 billion worth of new listings so far this year.

Founded in 2010 by entrepreneur Lei Jun (雷軍), 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 past year, International Data Corp said.

Xiaomi's IPO raised $4.7 billion at a valuation of about $54 billion - the world's biggest tech or telecom listing since Alibaba raised more than $20 billion in 2014, according to data provider Dealogic.

By contrast, China Literature Ltd, the e-book arm of Tencent Holdings, late past year raised $1.1 billion in its Hong Kong IPO amid heavy demand, with the retail portion being 625 times oversubscribed.

The IPO pricing valued the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, nearly half its original $100 billion ambition earlier this year.

So why did Xiaomi's IPO flop?

The weak debut arrived at one side while at another side, trade clash between the United States and China is escalating due to which global markets have disturbed.

"Other IPO candidates will rush to Hong Kong to list before the market sentiment shifts".

"We would like to thank the Hong Kong Stock Exchange and the Hong Kong Securities Regulatory Commission", Lei Jun, founder and CEO of Xiaomi, said at the listing ceremony.

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

Founder Lei Jun described Xiaomi as a new species of company, pursuing a "triathlon business model" combining hardware, internet and e-commerce services.

The giant Chinese smartphone maker, which completed its disappointing IPO in Hong Kong on Monday, made sure its workers knew precisely what to say if anyone asked.

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