Xiaomi founder, chairman and CEO, Lei Jun, hits the gong at the company's IPO launch on the Hong Kong Stock Exchange. Photo: AFP/Isaac Lawrence

It can only be the trade war effect. Chinese tech giant Xiaomi stumbled on its Hong Kong debut on Monday, falling by more than 5% before recovering to close at HK$16.80 (US$2.14).

The smartphone company opened down at HK$16.60, according to Dow Jones, which was below the initial public offering price of between HK$17 and HK$22 for the approximately 2.18 billion shares.

Still, the performance of Xiaomi was seen as a key test of investor sentiment for what is expected to be a packed IPO calendar in the coming months.

These include a US$4 billion deal from online food delivery-to-ticketing services platform Meituan Dianping and an up to US$10 billion IPO from China Tower, the world’s biggest mobile tower operator, Reuters reported.

“Other IPO candidates will rush to Hong Kong to list before the market sentiment shifts. And they have to speed up the pace if they aim for a good valuation,” said Hong Hao, the chief strategist at brokerage BOCOM International.

“However, 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,” Hong added.

Even before Xiaomi’s IPO, confidence was low, with investors selling at a discount on the unofficial “gray market” last week, Bloomberg reported.

Despite being one of the most anticipated Chinese technology public offerings this year, the group saw a disappointing valuation of US$54 billion, well below its ambitious US$100 billion target.

Founded in 2010 by entrepreneur Lei Jun, Xiaomi has grown from a start-up in Zhongguancun, which is known as China’s “Silicon Valley,” to become the world’s fourth-biggest smartphone vendor at the end of last year, according to International Data Corp.

Lei has even described Xiaomi as a “new species” of company with what he describes as a “triathlon” business model combining hardware, internet and e-commerce services.

Its products range from smart home gadgets, such as air purifiers, to non-tech items such as ballpoint pens and pillows.

Judging by Monday’s performance, Lei might end up suffering a few sleepless nights.

– with additional reporting from AFP

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.