Xiaomi’s Weak I.P.O. Raises Doubts About China’s Tech Boom

Lei Jun, second from right, the chairman and founder of Xiaomi, at the debut of his company’s shares in Hong Kong on Monday.

HONG KONG — Xiaomi’s public debut was supposed to value the Chinese gadget maker at $100 billion and set the stage for a global coming-out party for some of China’s most successful technology companies.

When Xiaomi finished its first day of trading on Monday, the company was worth only $48 billion, weakness that could hang over the rest of the Chinese tech players waiting to go public.

China has enjoyed a long-running technology boom that has put it on a par with Silicon Valley in terms of money raised and fortunes made. But lately, China’s economy has shown signs of slowing growth.

Some companies say money from Chinese lenders has become harder to come by. China’s leaders are bracing for a bruising fight with the United States over trade.

Xiaomi’s founder and chairman, Lei Jun, cited worries about the trade war just before the company’s shares began trading.

“At this critical moment in Sino-U.S. trade relations, the global capital markets are in a constant flux,” Mr. Lei said to a group that included Xiaomi employees at the Hong Kong Stock Exchange early Monday.

The expectations for Xiaomi have been falling in recent weeks. Investors started to re-evaluate the prospects for the company, which sells affordable smartphones and a slew of other gadgets. Although it was the biggest Chinese initial public offering since 2014, Xiaomi raised considerably less than it had originally hoped on Hong Kong’s stock market. Shares then fell slightly.

Xiaomi is widely expected to be the first of several big Chinese tech names to seek initial public offerings in coming months. They include Didi Chuxing, China’s version of Uber; Ant Financial, the financial affiliate of the Alibaba Group; and Meituan-Dianping, an online delivery service for food and products.

All three companies have benefited from the prevalence of smartphone use in China and the country’s wild online growth, which has made it by far the world’s largest internet market in terms of users. They could choose to go public in Hong Kong, which would give global investors a chance to bet on them.

Hong Kong is part of China but has a separate financial and legal system. Beijing hopes it can use Hong Kong’s lack of financial barriers with the rest of the world to let Chinese companies list their shares in a Chinese territory even as they tap global investors. The city loosened its rules to attract more big-name Chinese technology companies and benefit from one of the world’s biggest online booms.

Xiaomi’s shares on Monday ended at 16.80 Hong Kong dollars, or roughly $2.15 — just below the 17 Hong Kong dollars at which they began the day, and far below the company’s earlier hopes.

Though Mr. Lei cited trade, investor concerns about the company’s plan played a big role in its disappointing debut.

In recent months, as Xiaomi bankers and executives traveled around the world to meet with prospective investors, they pitched Xiaomi as an internet company and China’s answer to Apple. It was a formula — China plus internet — that in the past guaranteed strong support from overseas investors like hedge fund managers in the United States.

But many investors view Xiaomi as still largely a hardware maker, not an internet company. It has promised fatter margins from selling internet services to its smartphone users, but those services accounted for less than 9 percent of last year’s revenue.

“Xiaomi has been billing itself as a Chinese internet company, but they really are not quite yet a pure internet company,” said Dan Wang, a technology analyst at Gavekal Dragonomics.

“Investors haven’t really bought into that story,” Mr. Wang added.

Some investors were also concerned about Xiaomi’s focus on international growth, as its home market has become increasingly competitive. More than half of its sales are outside China, primarily in India, where it has a loyal following for its low-cost smartphones.

While that could be attractive to some investors in the long run, some saw more immediate risks. For example, Xiaomi was forced to backtrack in Brazil after it failed to establish a relationship with local carriers.

Xiaomi received wide news coverage this year when it announced its plans to list in Hong Kong, picking Hong Kong over New York, the listing venue of choice for some of China’s blockbuster offerings, like Alibaba.

Even with the tepid market response on Monday, Xiaomi persuaded a number of high-profile investors to buy shares. These included China Mobile, Qualcomm and China Merchants Bank Group, according to a term sheet seen by The New York Times.

And with its public market listing, Mr. Lei is a new billionaire. Wearing a tie in the same orange as his company’s logo, he told reporters at the Hong Kong Stock Exchange, “I am excited beyond words!”

Mr. Lei then hit the gong to signal the start of trading, and everyone watched as the company’s shares fell. And they continued to fall; by midmorning the stock had dropped 5 percent against a rising Hong Kong Stock Exchange.

By the end of the day, it had recovered some of the losses, after support from bargain hunters and Xiaomi’s bankers helped to push the share price back up.

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