Fall of shares by 40%
Even after avoiding Beijing’s retaliation and aiming to become the world’s largest smartphone producer, Xiaomi Corp. remains a loser among China’s IT giants.
Problems take their toll on mood
Despite the fact that the company surpassed Apple Inc. to become the world’s second largest smartphone manufacturer after Samsung Electronics Co. in the second quarter, some analysts lowered their price targets and stock recommendations, citing slowing demand, strong competition, and supply chain issues.
Hong Kong equities are nearing their lowest point in over a year, having dropped about 40% year-to-date and becoming one of the worst performers in the Hang Seng Tech Index in 2021.
The index’s performance is heavily reliant on internet-centric companies like Tencent Holding Ltd. and Alibaba Group Holding Ltd., both of which have been hard hit by Beijing’s crackdown. This contrasts with Goldman Sachs Group Inc. analysts who believe Xiaomi is one of the 50 stocks that could benefit from President Xi Jinping’s “Shared Prosperity” campaign.
Following price cuts earlier this month by Daiwa Securities Group Inc. and Credit Suisse Group AG of 14 percent and 19 percent, respectively, Macquarie Group Ltd. lowered Xiaomi to neutral on Wednesday, while lowering its price target by 48 percent.
In Hong Kong trading on Wednesday, Xiaomi shares dipped 1.5 percent.