The shares touched a low of HK$16.50 in opening deals on Monday.
"We are an internet firm", Xiaomi's founder and chief executive Lei Jun told the listing ceremony at the Hong Kong stock exchange. By the noon lunch break, the price recovered to HK$16.98 per share, before closing at HK$16.8, a loss of 1.2%, on trading volume of $979 million (HK$7.68 billion).
Analysts say this is partly because Chinese IT firms are likely to be affected by the ongoing trade friction with the United States.
And Jackson Wong, at Huarong International Securities, warned there could be repercussions for Hong Kong's IPO outlook, saying a tepid start for Xiaomi would suggest a weak appetite for new listings in the city. That's about half the value of up to $100 billion that some of the most bullish people were saying the company might be worth a few months ago when Xiaomi first launched the IPO. Before Monday, Hong Kong's benchmark index had fallen more than 10% from early June.
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The Sino-U.S. trade dispute has roiled financial markets including stocks and currencies, and the global trading of commodities from soybeans to coal over the past several weeks.
"We are an internet company and from Day 1 we have set up a weighted voting rights structure with dual-class shares", he added.
CEO Lei Jun acknowledged that "global capital markets are in constant flux" thanks to tensions between Beijing and the White House, which has seen trade tariffs levied on each side. The main stock market in London opened higher.
Shares in the Chinese smartphone maker sank as much as 5.9% from their listing price, which was already at the bottom of the range the company had sought.
Co-founded by billionaire Lei Jun, Xiaomi has a market value of about $50 billion, a far cry from the $100 billion touted a year ago. Most recent floats in Hong Kong dropped below IPO prices. It is also the first under the city's new exchange rules permitting dual-class shares, common in the US tech industry in an attempt to attract tech floats. The company is also making waves in Europe, where after less than two years in the market, it has become the fourth biggest smartphone seller.