Xpeng Motors opened up 1.5 percent in 'grey market' trading on Tuesday but quickly turned lower. Official trading of its shares will begin on Wednesday.

As of the close of the 'grey market' trading at 18:30 Beijing Time, Xpeng was down 1.82 percent to HK$162, below its offering price of HK$165.

Xpeng will start formal trading in Hong Kong under the ticker symbol "9868" on July 7.

As is customary for companies listed in Hong Kong, investors can trade Xpeng's shares on the grey market from 16:15-18:30 Beijing Time the day before official trading begins.

Xpeng will offer 85 million Class A common shares in a global offering, which will consist of an international offering of 80.75 million Class A common shares and a Hong Kong public offering of 4.25 million Class A common shares.

The company set the final offering price for both its international offering and its Hong Kong public offering at HK$165 per Class A common share.

The company announced earlier today that its international offering was oversubscribed, representing approximately 8.54 times the total number of shares initially available for subscription in the international offering. Its offering to retail investors in Hong Kong was 13.73 times oversubscribed.

Hong Kong stock gray market trading refers to trading between clients in the internal trading system of certain large brokerage firms without trading in the open market.

Trading in the gray market is operationally indistinguishable from normal trading of IPOs, except that the volume of trading in the gray market is not as large as that of an official IPO.

The gray market can reflect the sentiment of investors on that day. If a stock rises more in the gray market, it will generally rise more when it officially starts trading, and vice versa.

However, the gray market also has its limitations and cannot fully reflect the entire market. So the price of the gray market is not something that can simply be taken as the price of the official listing the next day.