Xiaomi’s weak debut portends trouble for imminent HK tech listings

HONG KONG: Xiaomi Corp´s shares fell as much as 6 percent in their Hong Kong debut on concerns over the Chinese smartphone maker´s valuation, in an ominous sign for its technology sector peers who have lined up listings in the city.

The share performance of Xiaomi is a key test of investor sentiment for what is expected to be a packed initial public offering (IPO) calendar in the coming months.

These include a $4 billion deal from online food delivery-to-ticketing services platform Meituan Dianping and an up to $10 billion IPO from China Tower, the world´s largest mobile tower operator.

"Other IPO candidates will rush to Hong Kong to list before the market sentiment shifts. And they have to speed up the pace if they aim for a good valuation," said Hong Hao, chief strategist at brokerage BOCOM International.

"However, given the targeted high valuations of many new-economy IPO hopefuls and the number of IPOs going forward, it will be challenging for the market to digest all of them," Hong said. Xiaomi priced its IPO at HK$17 per share, the bottom of the range it offered, raising $4.72 billion in the world´s biggest technology float in four years.

Its shares touched a low of HK$16 in early trade and later rallied to briefly touch its IPO price. The stock was at HK$16.88 after the midday break, while the main Hong Kong stock market index was 1.7 percent higher.

Xiaomi´s listing comes as investors fret over escalating trade tensions between the United States and China that have shaken markets over the past several weeks.

The spat pushed Hong Kong´s benchmark index to a nine-month low last week. Asked if the low pricing of Xiaomi and some other technology firms will weigh on upcoming IPOs, Hong Kong stock exchange CEO Charles Li said at the Xiaomi listing ceremony: "We cannot put a brake.

The market is always open. It´s open to everybody. If you don’t like the price, you can stay away." Xiaomi´s IPO valued the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, almost half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.