Xiaomi's IPO raised $4.7 billion at a valuation of about $54 billion, far lower than the big numbers that had been reported earlier in the year. The spat pushed Hong Kong's benchmark index to a nine-month low last week.
Shares in the smartphone maker closed at HK$16.8,1.2 per cent below its IPO price of HK$17.
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Xiaomi founder, Chairman and CEO Lei Jun (center) attends the listing of the company with Hong Kong Exchanges and Clearing Chairman Laura Cha (second left), Financial Secretary Paul Chan (second right) and Hong Kong Exchanges and Clearing Chief Executive Charles Li (right) at the Hong Kong Exchanges in Hong Kong, China, on July 9, 2018. It later expanded into computers, TVs and home appliances.
Typically companies are valued on a multiple of profits or sales. After its first day on the market, Xiaomi ended up raising $3.05 billion United States dollars.
And on Monday it ended down 1.18 percent at HK$16.80, though that was much better than in mid-morning trade, when it was briefly down nearly six percent.
Mo Jia, a Shanghai-based analyst with industry consultancy Canalys, said the weak debut was to be expected. Most recent floats in Hong Kong dropped below IPO prices.
Xiaomi Corp.'s market debut has failed to convince investors that it's capable of shedding a reliance on cheap phones and becoming an internet giant.
Xiaomi argued that it should receive a higher valuation than other hardware makers because of the internet services - such as music and video streaming apps - it offers with its devices.
Lei Jun also said, "Without the innovation of the Hong Kong capital markets, it would be hard for us to have a chance to list publicly in Hong Kong". From day one, we've set up a dual-class share structure.
"Tech companies looking to list their shares will need to take a more conservative approach in pricing", said Anthea Lai, an analyst with Bloomberg Intelligence.
Xiaomi is the biggest smartphone seller in India and is making inroads in Europe.