Xiaomi Sees Weak IPO Debut In Hong Kong

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Chinese smartphone maker Xiaomi had a soft debut at the Hong Kong Stock Exchange this morning as shares began trading at HK$16.6, 2.4% below its listing price (HK$17) which was already at the bottom of the range.

China Money Network previously reported that Xiaomi priced its stock at HK$17 per share, the lower end of the price range valuing the company at US$54 billion, nearly half of the initial US$100 billion valuation.

It recovered slightly by late morning as the broader Hong Kong market was up around 1.5%.

Riled amidst the brewing trade clash between the United States and China, the resultant response to Xiaomi’s opening was anticipated.

Acknowledging the current atmosphere, Xiaomi founder and CEO Lei Jun said, "At this critical moment in Sino-US trade relations, the global capital markets are in constant flux".

More than 7,000 Xiaomi employees own the company’s shares or options and two of them at the listing ceremony told a local Chinese media that they felt disappointed.

Last month, Xiaomi brought in several cornerstone investors including Qualcomm, China Merchants Capital, China Mobile and SF Express for its IPO. Xiaomi also secured investments from Tencent’s founder Pony Ma and Hong Kong billionaire Li Ka-shing.

"I would like to thank our 100,000+ investors for their recognition and support for Xiaomi, including Li Ka-Shing, Jack Ma, Pony Ma, and many others. Thank you all! Although the macro-economic conditions are far from ideal, we believe a great company can still rise to the challenge and distinguish itself," said Lei.

However, Hans Tung, managing director at GGV Capital, told Chinese reporters that early investors of Xiaomi, including Morningside Venture Capital, Qiming Venture Partners and Shunwei Capital, realized returns of several hundred percent.

Richard Liu, JD.com’s CEO, said he felt "relieved" for Lei when he saw Xiaomi priced its stock at the lower end on social media yesterday.

"In the past few years, some start-ups enjoyed super-high valuations thanks to abundant capital in the market. It created illusions for entrepreneurs, making them believe their companies really worth a lot. It is time to find out who is swimming naked when the tide goes out." Liu said.

Although there is a rush amongst Chinese tech companies for IPO’s they may not be necessarily well received by investors.

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