Shein trades down after Hong Kong debut

Key Points:

• Shein's shares fell as much as 10% on their Hong Kong stock market debut, closing nearly unchanged at HK$48.50 after raising about $1.7 billion in one of Hong Kong’s largest IPOs this year.
• The company's profitability has been squeezed by higher tariffs in the U.S. and EU, increased logistics costs due to geopolitical tensions, and the end of tariff exemptions for low-value parcels from China, leading to a $99 million loss in Q1 2024 compared to a $395 million profit a year earlier.
• Shein shifted its listing plans from New York and London to Hong Kong amid regulatory scrutiny and re-embraced its Chinese roots, leveraging its supply chain advantages in Guangdong province.
• The company faces challenges expanding in Europe, including an EU probe into alleged illegal products, and its recent acquisition of eco-friendly retailer Everlane has raised questions about strategic fit.
• Despite a reduced market valuation of around $27 billion, Shein’s listing is seen as positive for Hong Kong’s efforts to maintain its status as a global financial hub after a downturn in 2023.