Shares of the Chinese internet search giant Baidu Inc. closed at the same level as its debut price of HK$252 ($32.45) on the Hong Kong Stock Exchange on Tuesday.

Baidu's shares made a lukewarm performance  in the debut, compared with two other U.S.-listed Chinese tech giants that returned to Hong Kong for secondary listings last year, NetEase and JD.com, whose shares prices opened 8.13 percent and 5.75 percent higher respectively, on their first day of trading in the city. 

Baidu's deal that raised $3.1 billion was oversubscribed by retail investors by 112 times, and institutional investors by 10 times, according to the company's filings with the Hong Kong Stock Exchange.

The company was once part of China's internet triumvirate alongside Alibaba and Tencent. With its internet search services-focused ecosystems being eroded by competitors, the firm has altered its business strategies.

While Baidu focused on the development of search engines for the first decade since it was founded in 2000, it has over the past decade shifted its business focus to cutting-edge technologies such as autonomous driving, artificial intelligence (AI) and AI chips, according to Baidu's founder Li Yanhong. 

The firm has become an AI company and will continue investing in technology even in the most difficult times, he added. 

In January, Baidu announced plans to establish an intelligent electric vehicles (EV) company, teaming up with auto manufacturer Geely. With this collaboration, Baidu will provide intelligent driving capabilities to power the passenger vehicles, while Geely will contribute its expertise in automobile design and manufacturing.

The venture with Geely will accelerate that integration, Li said in an interview with Bloomberg, with a goal to deliver its own EVs to the market within three years.

Why so subtle?

Tony Yang, portfolio manager at Sina Group-backed broker Valuable Capital, attributed Baidu's subtle performance to two reasons. 

First, the current valuation of the company is relatively high. "In contrast to the contraction of the valuation of U.S.-listed technology companies, valuation is a factor that suppresses the stock price," Yang said.

Second, the poor performance of the Hang Seng Index today indicated that pressure on the entire market still exists.

Bright future?

Five business sectors have supported Baidu's valuation, including traditional online advertising, autonomous driving, Baidu Cloud, and video streaming platform iQIYI and other investments, Yang said.

The traditional advertising business accounts for about 40 percent of the firm's valuation, while the emerging autonomous driving and cloud business together account for about one-third, he added.

"We believe that the future growth of Baidu's valuation will mainly depend on the development of autonomous driving and Baidu Cloud," Yang said, adding that Baidu's accumulation of autonomous driving has entered the world's first tier.

Although being optimistic in the long-term, he cautioned that Baidu's emerging businesses, such as autonomous driving and Baidu Cloud, would tumble with the general changes of the market. Plus the further rising yield of the U.S. 10-year Treasury bonds continue to squeeze the valuation of U.S.-listed tech companies, the valuation of the two sectors are under the pressure of compression in the short- and medium-term, which could affect the company's valuation. 

Chinese blue chip tech firms are facing growing regulatory pressure at home. Baidu was among the 12 companies fined over deals that violated anti-monopoly rules earlier this month. Beijing is making good on its promise to clamp down on the sprawling platform economy.

While demand for these companies has seen valuations soar over the last few years, risk and responsible growth are mantras that could define their share prices in the future.

(CGTN's Global Business contributed to this story)

(Cover: Employees walk through a lobby at the Baidu Inc. headquarters in Beijing, China, March 4, 2021. /CFP)