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Companies

US-China tensions hold up Xiaomi's mainland listing

With market at two-year low, company sticks to Hong Kong

Xiaomi will concentrate on its Hong Kong initial public offering for now, but that market has lost momentum as well.   © Reuters

SHANGHAI -- Smartphone maker Xiaomi has postponed a listing in Shanghai to concentrate on its Hong Kong initial public offering as worries about the impact of a U.S.-China trade war undercut mainland stocks.

The Beijing-based company will look for another opportunity to issue Chinese depositary receipts after the Hong Kong IPO, a spokesperson said on Tuesday. At Xiaomi's request, China's securities regulator canceled a final review of the company's Shanghai listing application that day.

The moves came as the Shanghai Composite Index tumbled almost 4%, falling below the psychologically significant 3,000 mark to a roughly two-year low. "The weakness in Chinese equities had an effect" on Xiaomi's decision, according to an investment banker.

The CDR listing would have given mainland investors access to Xiaomi, which had been aiming to raise $10 billion in simultaneous offerings in Shanghai and Hong Kong. The company will now have to reconsider its fundraising plans, since they had been split evenly between the two markets.

Xiaomi has found success as a stylish, low-cost alternative to Apple and Samsung Electronics in China, India and other Asian emerging markets. Its IPO is one of the most anticipated listings this year.

But equity investors remain bearish as U.S. President Donald Trump threatens additional tariffs on Chinese goods and indicators suggest a slowdown in the world's second-largest economy. Some Shanghai market watchers had worried that a Xiaomi debut would upset the already shaky supply-demand balance.

Xiaomi's Hong Kong IPO could also disappoint, however, as the market there has lost momentum following a bull run that began in 2016.

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