Shares in China’s Xiaomi dip on Hong Kong debut

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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.

Shares in Xiaomi, the Chinese mobile phone maker, slid nearly 6% at the start of trading in Hong Kong.

The drop came after an affordable smartphones and other gadgets maker, Xiaomi priced its IPO at a valuation of about $54 billion, far lower than its target range.

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

Xiaomi sold 2.18 billion shares in its IPO, 1.4 billion of which were new shares. Instead, the current valuation of $46 billion essentially means the company's value remains unchanged from its last fundraising round in 2014.

At the same time, one of WeDoctor's strongest rivals, Ping An Good Doctor, which is backed by Chinese insurance giant Ping An Insurance Group, has shed about 18 per cent in share prices since its debut on the Hong Kong bourse in May.

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 short-term share price is not as important as the long-term performance, as the general market situations are not ideal, according to Lei Jun, the founder and chairman of the Beijing-based tech firm.

"The debut has been pretty solid given the headwinds they've faced coming in, including the size of the deal, the newness of what they're trying to do, CDRs (Chinese depositary receipts), dual-share class voting rights and trade wars".

Tencent-backed online health care solutions platform WeDoctor, valued at US$5.5 billion after its latest round of fundraising, said on Monday it was actively preparing for a flotation in Hong Kong, despite the recent bearish sentiment in the market.

Xiaomi focuses on low-cost, high-performance smartphones and touts an innovative business model that features online services, a range of consumer electronics products built by partner firms, and a retail strategy that includes a network of physical stores.

Xiaomi is the biggest smartphone seller in India and is making inroads in Europe.