Xiaomi shares down 1.18 percent from IPO price in Hong Kong

The share price of domestic handset-maker Xiaomi closed more than 1 percent lower from its IPO price during its debut in Hong Kong on Monday, after the tech company disappointed investors with a delay in share offerings on the Chinese mainland and amid an escalating trade row between China and the US.

Xiaomi shares closed at HK$16.80 ($2.14) on Monday, compared with an IPO price of HK$17, down 1.18 percent. Its opening price slid 2.35 percent to HK$16.6.

The tech company priced its IPO on Friday at HK$17 per share, which was at the bottom of an earlier indicative range of HK$17-HK$22.

The eight-year-old unicorn is valued at $54 billion based on its IPO price, almost half of its original expectation of $100 billion, Reuters reported.

Responding to the decline, Lei Jun, founder and chairman of Xiaomi, said Monday that “for Xiaomi, starting from a low point may be a good thing,” industry website iresearch.com reported.

“The short-term share [ fluctuations] are not that important due to the overall challenging environment in [the stock market], and it is the long-term performance that matters most,” Lei added.

Dong Dengxin, director of the Financial Securities Institute at the Wuhan University of Science and Technology, noted that debuting below the IPO price is also normal, even in European and US stock markets.

“For example, this happens 20 to 30 percent of the time in the European and US stock markets, while in the Hong Kong stock market, it happens 10 to 15 percent of the time,” Dong said.

However, Dong expressed some concerns that the low starting point might put some pressure on the tech company’s development amid unstable global trade relations.

“With its good growth mindset and competitive products, I’m overall positive about Xiaomi’s performance in the future,” Dong added.

Lei was quoted in another sina.com report as saying that “it is not the right time for the tech company to start China depositary receipts (CDRs) issuances and listings in Hong Kong at the same time.”

Xiaomi had reportedly been aiming for $10 billion in fundraising from both Hong Kong and the Chinese mainland market collectively. But in June, the company postponed its share offering on the Chinese mainland.