Shein loses ground on first trading day in Hong Kong

The course of the first trading day suggests that professional investors are assessing the business model, with its significantly lower margins, more critically than end customers. Shein sells clothing and accessories at prices considered unusually low in retail.

Analyst sees warning signal for margins

Josh Gilbert, Senior Analyst for the Asia-Pacific region at broker eToro, commented on the market reaction with a comparison between end customers and shareholders. Gilbert said in English: „Shein spent a decade proving how many people are willing to buy a dress for five dollars. But on its first trading day in Hongkong, the company had to learn that buyers and shareholders buy two very different things."

The IPO in Hong Kong is also remarkable because Shein had initially considered a listing attempt in New York but decided in favor of the Asian financial center instead. By choosing Hong Kong, the company said it wanted to emphasize its roots in China more strongly and be listed closer to its main markets in Asia.

The company is under pressure in several markets: In Europe, political debates are ongoing about competitive conditions for cheap imports from Asia, and in the U.S., tariff regulations are being discussed that could impose heavier burdens on imported textiles. These discussions have accompanied Shein for months and have shaped the mood surrounding the IPO.

Pressure from Europe and the U.S.

Analysts also point to the general volatility of young fashion stocks on Asian exchanges. Many investors compare Shein's business model with that of classic fast-fashion chains, which in the past have suffered from rising labor and transportation costs.

For Shein, the IPO in Hong Kong is a prestige project meant to underscore the company's independence from its original parent company in China. However, the course of the first trading day raises questions about whether the market values the pace of growth and profitability as positively as consumers do.

According to observers, the further share price development is likely to depend on how Shein balances margin and growth in the coming quarters. Regulatory debates in Europe and the U.S. will also influence the perception of the stock.

Outlook for the coming quarters

Shein has so far responded to the weak start by pointing to long-term growth plans. The company sees the IPO as a milestone in its international expansion strategy, despite the subdued first trading day.

Observers interpret the trading activity as a typical sign that stock prices can fluctuate sharply in the first hours after a listing. A final assessment of the IPO can therefore only be made after a few trading days, it was said.

Shein had also justified its choice of Hong Kong as the listing location by saying that the financial center is meant to serve as a gateway to Asian capital markets and as a symbol for the connection to the Chinese homeland. With the weak start, this strategic claim is now coming under additional scrutiny.