Xiaomi Showed Off Last Quarter, Big Time

Xiaomi Showed Off Last Quarter, Big Time
Theodora Lee Joseph, CFA

25 days ago2 mins

What’s going on here?

Chinese tech company Xiaomi grabbed all the attention last quarter, leaving US competitors in the shadows.

What does this mean?

Chinese shoppers haven’t been won over by the iPhone 15, despite Apple generously fitting the devices out with a couple more millimeters of display and some extra oomph in the inner core. Instead, their heads have been turned by Xiaomi’s more budget-friendly offerings. In fact, of the world’s five biggest smartphone brands, Xiaomi’s the only one that shipped more phones last quarter than both the previous quarter and the same time last year. Fold in a successful electric vehicle arm and hopes of AI-fueled streamlining, and the Chinese company’s stock has dialed up by 62% since June.

Xiaomi stock outperforms

Why should I care?

For markets: Asia is a changing landscape.

China’s economic woes are shaping shoppers’ spending habits across the board, not just concerning new gadgets. On top of that, Japanese products are especially out of favor, with China taking a hard stance ever since Japan dumped treated water from the damaged Fukushima nuclear plant into the ocean. Case in point: Japanese cosmetics brand Shiseido was forced to trim its predictions for this year’s profit on Friday. So along with similarly hard-pressed peers like Apple, the company may want to look toward India for cheaper production costs and mounting demand for nice-to-haves.

The bigger picture: The US is old news.

China’s tech companies struggled to find their feet this year, tripped up by the country’s wobbling recovery. That’s left some big names nursing bruised stock prices, a stark contrast to US stocks which have picked up this year. So investors, wise to the fact that the likes of Apple and Tesla are facing challenges locally, could take the opportunity to back Chinese rivals for less. The Nasdaq Golden Dragon China index could be a popular choice: featuring major companies like Alibaba and JD.com, it’s around 30% cheaper to buy into than the Nasdaq 100 index.

Nasdaq Golden Dragon vs Nasdaq 100
Source: Google Finance


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