Xiaomi IPO: Smartphone maker's stock drops in Hong Kong debut

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Trading opened at 16.60 Hong Kong dollars ($2.11) per share, below Xiaomi's offering price of 17 Hong Kong dollars ($2.17). Ltd. and ZTE Corp. encountered a slew of setbacks in the market amid concerns of national security risks, KGI Securities said in a note on June 25.

Lei Jun, founder and CEO of Xiaomi, hits a gong at the listing ceremony of Xiaomi in Hong Kong, south China, July 9, 2018. Before Monday, Hong Kong's benchmark index had fallen more than 10% from early June. It raised $4.72 billion from its IPO, making this the world's biggest new technology in four years.

Xiaomi's IPO valued the firm, which also makes internet-connected home appliances and gadgets, at $54 billion, nearly half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.

Retail investors failed to show much interest in Xiaomi despite the hype, but those who bought into the IPO may be able to flip their shares from Friday.

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Let us know in the comments if you think Xiaomi will do well in the medium and long term in terms of its stock price. Razer, a maker of gaming laptops and accessories, and online car-financing provider Yixin Group trade more than 50 per cent below their November issue price.

Analysts say this is partly because Chinese IT firms are likely to be affected by the ongoing trade friction with the United States.

Xiaomi is one of the world's most hotly anticipated stock market listings, having risen to prominence in developing markets, such as China.

"We are an internet company and from Day 1 we have set up a weighted voting rights structure with dual-class shares", he added.

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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.

He said Xiaomi will also continue to expand offerings within its "ecosystem", in which some of its nonsmartphone products such as TVs, power banks and electric scooters have been the top sellers in China.

Xiaomi struggled in its debut on the Hong Kong stock market Monday morning, with its shares falling by almost 6 percent.

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