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Apple challenger makes lacklustre Hong Kong stock debut

One of the tech world’s most hotly anticipated stock market listings made a lacklustre start to trading amid concerns of a trade war and the valuation of the company. 

Shares in Xiaomi, the Chinese mobile phone maker, slid almost 6% at the start of trading in Hong Kong. At midday, the stock staged a recovery from HK$16 (£1.53) to HK$16.96 but was still below its debut price of HK$17.

The company, which had hoped to be valued at $100bn (£75 billion) earlier this year, is currently worth about $53bn, making it the third largest listed maker of mobile phones.
“Trading below the issue price suggested that investors still felt the valuation of the stocks was relatively high compared with Tencent and Apple,” Linus Yip, chief strategist at First Shanghai Securities, told Reuters.
Typically companies are valued on a multiple of profits or sales. In the case of Xiaomi, it was valued at 39.6 times its 2018 earnings, another measure of profitability. Apple is trading at 16 times earnings and Chinese social media giant Tencent is trading at 36 times.

Xiaomi also made its debut amid an escalating trade war between the United States and China, which has sent the Hong Kong stock market, Hang Seng, to a nine-month low.
Still, the eight-year-old company, which has ambitions to transform itself from a low-cost maker of phones to a global rival to match Apple, managed to raise $4.72bn, making it the world’s biggest technology float in four years.

More from Business

Chinese e-commerce site Alibaba raised $25bn in New York in 2014.
Xiaomi is the biggest smartphone seller in India and is making inroads in Europe.

Source: Sky

About Business Ideas UK

My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups.

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