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

Chinese Smartphone Maker Xiaomi Falls in Hong Kong Trading Debut

The stock that was made available to retail investors drew orders represented 9.5 times the shares offered, the company said Friday.

"Trading below the issue price suggested that investors still felt the valuation of the stocks was relatively high compared with Tencent and Apple", Linus Yip, chief strategist at First Shanghai Securities, told Reuters.

A new wave of Chinese tech companies are planning forays into public markets to raise billions of dollars through initial public offerings. In the case of Xiaomi, it was valued at 39.6 times its 2018 earnings, another measure of profitability.

Xiaomi's listing comes at a delicate time for Hong Kong's stock market, with the benchmark Hang Seng index falling 2.7 per cent last week and 5.8 per cent this year as investors fret over escalating trade tensions between the United States and China.

The Sino-US 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.

"We are an internet firm".

Speaking at the ceremonial opening of trading, Xiaomi's chairman Jun Lei acknowledged that the timing of the IPO might not be optimal given the state of trade friction between the U.S. and China.

That is far short of the oversubscription rates for other tech IPOs in Hong Kong. Shares fell as low as HK$16 a share and were recently at HK$16.82.

But doubts about the sustainability of its business model were among the reasons for the lower valuation, analysts said.

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