Xiaomi Dives Into a Choppy Market
July 09 2018 - 3:07AM
Dow Jones News
By Saumya Vaishampayan
Stocks in Asia rallied on Monday, including a 1.7% advance in
the Shanghai Composite and a 1.2% rise in Japan's Topix.
Monday's Big Theme
The region's technology giants have hit a rough patch in recent
months, providing a rocky backdrop for smartphone-maker Xiaomi's
Hong Kong debut.
What's Happening
Xiaomi's shares dipped below their offer price of 17 Hong Kong
dollars (US$2.17) in early trading in Hong Kong, before recovering
to finish the morning session almost flat. The $4.7 billion share
sale could be the first of several huge tech listings in the
city.
Asian technology stocks have underperformed U.S. rivals this
year, with MSCI's regional gauge down 4.5%, compared with a 13%
rise for its American counterpart.
Chinese gaming and social-media giant Tencent Holdings, a key
constituent of Hong Kong's Hang Seng and the MSCI regional
technology index, has slumped nearly 8% from a high on June 7, even
after a 2.4% rise on Monday. Samsung Electronics, the world's
largest smartphone and semiconductor maker, has shed more than 13%
since its 2018 peak on May 3.
Chinese internet companies listed in the U.S. have also pulled
back. Alibaba Group Holding is off 8.8% since hitting its 2018 high
on June 14--though it is up more than 11% for the year.
Market Reaction
Analysts cite several factors, including disappointing
earnings.
"Last year, I think every fund manager held Tencent," said Julia
Pan, an internet analyst at UOB Kay Hian in Shanghai. But as 2018
began, she said, they realized it couldn't perform as well as in
2017 and sold--contributing to the stock's decline.
Alibaba, Tencent, and others are now exploring different avenues
for growth and investing more in research and development. Those
efforts could squeeze margins and hit profits, according to Ms.
Pan, further denting sentiment.
Prices of two major kinds of memory chips have dropped this
year, leading to a profit forecast from Samsung on Friday that was
below analysts' expectations.
In other cases, deteriorating trade relations between the U.S.
and China have played a role. Chinese telecoms giant ZTE's Hong
Kong shares are down 57% this year, with U.S. punishments for
sanctions-busting throwing its future into doubt.
Elsewhere
The WSJ Dollar Index, which measures the U.S. currency against
16 others, slipped 0.1%. U.S. crude oil rose 0.3% to $74.06 a
barrel.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
(END) Dow Jones Newswires
July 09, 2018 02:52 ET (06:52 GMT)
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