Shein shares slip more than 3% on second day of Hong Kong trading

Hong Kong's Shein shares dropped over 3% on Wednesday, following a weak debut day in the city's stock market. The online fast-fashion company's stock fell by up to 10% on Tuesday before recovering to trade near its offering price of HK$48.56. By early Wednesday, Shein shares were trading at HK$46.94. The stock's performance was affected by measures aimed at stabilizing large listings, according to a source and analysts.

Shein raised $1.7 billion in its IPO, valuing the company at $26.5 billion, which was nearly a quarter of its peak valuation of nearly $100 billion in 2022. Factors such as higher import duties in key markets, growing regulatory risks, and increased competition from rivals are impacting Shein's growth prospects, according to investors and analysts.

Brendon Ho, head of investment advisory for Singapore at Arta Finance, noted that Shein's weak performance indicates investors are reassessing the company's growth story, which has become more difficult to justify. Revenue growth has slowed in recent years, while margins are under pressure. Additionally, higher tariffs and customs costs in the US and EU are negatively affecting Shein's low-cost cross-border model.