Chinese smartphone giant Xiaomi's shares open 2.9% down in Hong Kong debut

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Its shares were priced at 17 Hong Kong dollars (about $2, £1 or AU$3), but hit a low of 16 HK dollars before bouncing back up to 16.88 HK dollars ahead of the midday break, according to Reuters. During the day prices slipped to as low as HK$16 ($2.04) but managed to climb to HK$16.80 ($2.14) by closing time.

Xiaomi's IPO valued the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, nearly half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.

Xiaomi struggled in its debut on the Hong Kong stock market Monday morning, with its shares falling by almost 6 percent.

Xiaomi's Founder, Chairman and CEO Lei Jun (right) and Chew Shou Zi, senior vice president and chief financial officer gesture during the listing ceremony at the Hong Kong Stock Exchange in Hong Kong on July 9, 2018.

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Xiaomi's lukewarm showing marks a blow for a smartphone maker with designs on expanding its global footprint and transforming from a low-margin hardware company into an Internet services player in the mold of Apple Inc. Even though much of the company's revenue comes from smartphones sales, Xiaomi has pinned its hope on internet services to account for most of the profit in the future.

"We are an internet firm". That is far short of the oversubscription rates for other tech IPOs in Hong Kong. It is also the first under the city's new rules permitting dual-class shares, common among US tech firms, in an attempt to attract tech sector floats. From day one, we've set up a dual-class share structure.

Xiaomi had attracted a number of A-list investors to its IPO, as George Soros joined fellow billionaires Li Ka-shing, Jack Ma and Pony Ma in endorsing the IPO.

But doubts about the sustainability of its business model were among the reasons for the lower valuation, analysts said.

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