Xiaomi gets no lift from giant rally

HONG KONG: If the rising tide of investor optimism in China (and tech shares) is supposed to lift all equity boats, then at the moment Xiaomi Corp appears to be adrift.

The smartphone maker’s stock has failed to benefit from the wave of investor cash that’s flooded into Chinese equities this year, retreating more than 6% in the face of double-digit rallies for benchmarks in both Hong Kong and China. To add insult to injury, mainland technology shares have led gains in the CSI 300 Index, with a 47% rally.

Xiaomi has lost almost 30% since its highly anticipated trading debut in Hong Kong last July, hampered by plateauing smartphone demand globally and especially in its home market, where it still generated more than half its revenue in the third quarter. Add to that broad headwinds for Chinese names amid the US-China trade war.

The company was one of a wave of hot-shot initial public offerings in Hong Kong that fizzled last year, with the likes of Ping An Healthcare and Technology Co, Ascletis Pharma Inc and food-delivery giant Meituan Dianping all stumbling out of the starting blocks. Yet while even the latter three have bounced back at least 10% (Ping An Good Doctor has made a 68% comeback, actually) this year, Xiaomi remains mired in its rut.

One contributing factor is likely the fresh wave of selling Xiaomi experienced in January after its lockup period ended, when key investors were allowed to sell shares.

Despite the IPO’s disappointment, those who picked up the stock in its earliest funding rounds between 2010 and 2011 for as little as 1.95 Hong Kong cents may have reaped a profit of almost 57,000% if they sold in January.