Shares in Shein fell 8 per cent on their first day of Hong Kong trade on Tuesday, valuing the online fast-fashion retailer at roughly US$24 billion.
The morning price of HK$44.60 represents a steep reset from the company’s peak valuation of nearly $100 billion in 2022. Hong Kong’s benchmark Hang Seng Index slipped 0.6 per cent over the same session.
Shein turned to Hong Kong after regulatory pushback from Chinese authorities blocked earlier listing attempts in New York and London. The public offer sold about 6.6 per cent of the company’s enlarged share capital. Cornerstone investors took roughly one-fifth of the shares on offer, leaving just 5 per cent freely tradeable under a six-month lockup agreement.
Valuation gap with regional rivals
Investor appetite remained muted throughout the sale. The retail portion was subscribed 5.63 times and the international tranche 2.59 times, trailing the hundreds-fold subscriptions common in Hong Kong’s technology and robotics listings.
Saxo market data shows Shein listed at 15 times forward earnings. That multiple is more than double the valuation of PDD Holdings, the owner of Temu, giving Shein a premium price tag despite heightened geopolitical friction and slower earnings visibility across major Western markets.
RetailNews Asia notes that the muted debut reflects how quickly cross-border e-commerce economics deteriorated once Western customs loopholes vanished. For years, Chinese discount retailers expanded into the US and Europe by relying on tax exemptions for low-value parcels. Now that both jurisdictions levy duties on direct-shipped goods, margins across the entire ultra-fast fashion export sector are compressing simultaneously.
Tariffs squeeze operating margins
Policy changes in Shein’s largest markets dismantled its core cost advantage. The US repealed its duty exemption for packages under $800 last year, and the European Union instituted collection fees on small consumer shipments.
Higher customs duties, tariffs and logistics expenses across Europe and the Middle East dragged Shein’s net income down 39 per cent last year, pushing the business into an operating loss in the first quarter. To compensate earlier venture backers who bought in at higher price points, Shein agreed to disburse $3.5 billion in cash payments and execute share adjustments for select preferred stockholders.
Management has turned to acquisitions and marketplace fees to diversify revenue. The company purchased American clothing label Everlane in May, adding to earlier takeovers of British brand Missguided and French fashion label Pimkie.
Attention now turns to Shein’s upcoming first-half financial report, where the company projected operating profit margins will fall below first-quarter levels.
