Shein's Stocks Fell After Expected Stock Market Debut

Fast-fashion giant Shein has started trading on the Hong Kong stock exchange after a long wait. However, contrary to expectations, its stocks experienced a significant drop on the first trading day. Concerns over the failures of previous attempts and the company's labor practices and environmental impacts have shaken investor confidence.

Once valued at around $100 billion, Shein is now worth only a quarter of that amount. Despite being popular among young people, the company faces increasing competition and trade tensions. Leigh Gui, the company's CFO, stated during the stock market debut celebration that Shein operates in over 160 markets and that its fast payment options and small order sales model have been successful.

Stocks lost up to 10% of their value when they first started trading. By midday, they were trading at around 47 Hong Kong dollars, reflecting a drop of about 3.5%. While investors express doubts about Shein's growth potential, this situation also means that low prices may not be sustainable for customers.

This stock market debut has been recorded as the largest IPO of the year in Hong Kong and is seen as a test of investment appetite for the fast fashion industry. However, challenges faced by competitors like Asos and Boohoo are undermining investor confidence in Shein. Despite having 273 million active customers, rising costs and regulatory scrutiny threaten the company's future growth targets.

Shein's stock journey reflects the political pressures and regulatory hurdles faced by China-based companies on the international stage. The company has previously attempted to go public in the US and the UK, but these attempts have faced various obstacles. As a result, Hong Kong has become an exit point for Chinese companies.

Source: BBC Business