The second day for Xiaomi as a public company has been much better than the first. The smartphone maker based in China saw its shares close in Hong Kong 13% higher on Tuesday, with gains intraday as high as 15%. The gain came following a weak debut by Xiaomi on Monday when shares dropped by up to 5.9% before paring losses and closing down 1%.
The company debuted in Hong Kong as a public company after raising more than $4.7 billion in the biggest IPO in the world for the tech industry since the 2014 debut of Alibaba.
The rally on Tuesday took shares of Xiaomi above the HK$17 issue price, which is equivalent to US$2.17.
The biggest reason for Tuesday’s rebound was an announcement that the smartphone maker will in short order be part of the Hang Seng Composite Index.
The inclusion of Xiaomi in the index that is expected to take place before the end of July means its shares will become available to investors on mainland China, through the links the stock exchange in Hong Kong has with markets in both Shenzhen and Shanghai.
Traders have bet that enthusiasm will come from investors on the mainland to purchase shares of Xiaomi. The smartphone maker previously has sought to list shares on the mainland of China while also in Hong Kong, but postponed that.
The IPO for the company ended far smaller than the $10 billion that it originally targeted earlier in the year, and shares were priced near the bottom of the established range that was announced by the company last month.
On Monday Lei Jun the CEO at Xiaomi called the recent turmoil in the market due to the escalating trade battle between Beijing and Washington conditions that were far from ideal.
Some analysts expressed doubts about the potential for Xiaomi to increase its profit margins moving forward, given that much of its sales in smartphones are in the lower end of the handset market.
The company wanted investors to see it as an internet services company and not a hardware maker. However, it struggled attempting to persuade investors to pay so much for that.
The main business for Xiaomi is phones. However, it sells several other devices that are internet-connected, including laptops as well as smart rice cookers. The majority of sales for Xiaomi are in China. However, it is aggressively growing in other countries of which one is India.