Xiaomi’s share surge falls victim to investor worries over outlook for Chinese tech firms
The smartphone maker posted strong results in its first financial report as a publicly traded company, but concerns over the impact of the US-China trade war and poor results for other tech firms have soured sentiment
Shares in Chinese smartphone maker Xiaomi briefly surged as much as 7 per cent in Hong Kong on Thursday after its first-half profit topped market forecasts, but lingering concerns over the outlook for China’s tech giants saw it shed all the gains by the end of trading.
Xiaomi, which went public in Hong Kong on July 9, rose to as high as HK$18.96 in the morning session, before closing at HK$17.44, down 1.4 per cent. The benchmark Hang Seng Index dropped 0.5 per cent to 27,790.46. Xiaomi shares had risen for four sessions before Thursday.
In its first financial report as a publicly traded company, Xiaomi said net profit reached 7.65 billion yuan (US$1.1 billion) in the first six months of 2018, rebounding from a loss of 19.8 billion yuan in the same period a year earlier. Revenue increased 75 per cent to 79.6 billion yuan.
“Xiaomi has had a strong second quarter, and analysts are happy about its performance. But the current market environment is weak,” said Alvin Cheung, associate director at Prudential Securities.
He expected the US-China trade dispute to continue haunting the market. The US has targeted Chinese technology firms in the tariffs it has imposed, raising concerns over the future business outlook for the sector.