Its share price surged to $19.14 in early afternoon trading from its IPO of $17.
Bloomberg reports that Xiaomi climbed 14% a day after its lacklustre debut as investors began to regain confidence in the world’s third-largest listed smartphone maker.
The Chinese smartphone maker surged to a high of $19.14 in early afternoon trading, well above its $17 initial public offering price, with roughly 347 million shares changing hands.
The rebound made Xiaomi recover from its worst first-day performance by a US$1b Hong Kong IPO since 2015. In the long run, however, the firm needs to convince investors that it can achieve its goal of becoming an internet giant despite the fact that it maintains its status as an internet services company even though most of its revenue come from hardware.
Read more of Bloomberg's report here.
Earlier, Reuters reported that Xiaomi’s weak debut, signified by its shares falling by as much as 6% on valuation concerns, signals an ominous direction for other blockbuster IPOs lined up for the second half of the year.
Xiaomi shares closed at $16.80, having touched a low of $16 in early trade, compared to the IPO price of $17 per share as the Chinese smartphone maker’s float came against the backdrop of heightening trade tensions between the two largest economic superpowers, pushing Hong Kong’s benchmark index to a nine-month low last week.
Hong Kong’s blockbuster IPO year which counts online food delivery-to-ticketing services platform Meituan Dianping, mobile tower operator China Tower and around 10 unicorns seeking a local flotation, may be at risk from an increasingly conservative market environment.
“Given the targeted high valuations of many new-economy IPO hopefuls and the number of IPOs going forward, it will be challenging for the market to digest all of them,” said Hong Hao, chief strategist at brokerage BOCOM International.
In fact, history shows that widely anticipated public debuts have largely failed to live up to the hype after delivering meager returns. Amongst recent popular IPOs, China Literature Ltd. is down more than 30% from its peak whilst Razer Inc., Yixin Group Ltd. and ZhongAn Online P&C Insurance Co. are all down more than 40% from their respective highs.
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