The company's shares sank nearly 6 percent to HK$16 at one point - from an IPO price of HK$17, which was already at the low end of its expected range - before clawing back to end the morning at HK$16.98.
Aside from global market concerns, investors are said to have been unsure of Xiaomi's ecosystem story.
Shares in Xiaomi, the Chinese mobile phone maker, slid nearly 6% at the start of trading in Hong Kong.
Xiaomi, one of the world's biggest smartphone companies, saw its shares slip 6pc in early trading on the Hong Kong Stock Exchange.
Xiaomi's shares had previously priced at the bottom of their range and traded below their IPO price in gray market trade late last week, as investors anxious about the company's prospects in the intensely competitive global smartphone market.
Stocks in Hong Kong and Shanghai have taken heavy hits.
Xiaomi's IPO valued the firm, which also makes internet-connected home appliances and gadgets, at $54 billion, nearly half the $100 billion it had initially hoped for and below its more recent target of at least $70 billion.
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But Mo Jia of Canalys said the IPO was a "must-go for them even though the current situation is not positive", as Xiaomi would need the cash for an ongoing global expansion as it looks to broaden its scope outside the saturated Chinese smartphone market. "If you don't like the price, you can stay away".
At Monday's closing price the company had a market value of $53.3 billion. Others say the ongoing trade war between the USA and China has spooked investors from putting money in Chinese companies.
And while markets still expect Xiaomi to eventually offer CDRs, there's a split in opinion on when that will happen. Most recent floats in Hong Kong dropped below IPO prices.
"I think short-term stock price is mostly dictated by market conditions".
Founder Lei Jun described Xiaomi as a new species of company, pursuing a "triathlon business model" combining hardware, internet and e-commerce services.
"We are an internet company and from Day 1 we have set up a weighted voting rights structure with dual-class shares", he added.
During his speech at the launch ceremony, Lei said that Xiaomi had attracted investment from more than 100,000 investors, including Li Ka-shing, a Hong Kong-based business magnate, Tencent's Pony Ma, and Alibaba founder Jack Ma, The Paper reports. 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.