Shein shares slump 16% in gray market before HK debut

Shein's gray-market shares fell more than 16 percent on Monday, one day before the fast-fashion retailer's Hong Kong Stock Exchange debut.

"Investors see greater potential in AI and robotics themes than in fast fashion at the moment," Bevis Ho, senior analyst at Futu Securities, said.

The company raised $1.7 billion at HK$48.56 a share, valuing it at about $26.5 billion, according to sources who declined to be identified. Official pricing is due to be announced later on Monday. At Futu, Hong Kong's largest retail brokerage by volume, Shein's stock last traded around HK$42, according to its mobile app. Bright Smart and Phillip Securities also quoted declines exceeding 10 percent within minutes of gray-market trading starting.

The valuation sits at slightly above a quarter of Shein's nearly $100 billion private market peak in 2022, hit by tariff and duty changes in the U.S. and Europe that undermined the foundations of its cross-border e-commerce model. The sharp cut reflects caution among both retail and institutional investors, Ho said.

Gray-market prices are quoted by brokerages ahead of a security being officially traded on an exchange. The decline signals weak demand ahead of Tuesday's Main Board listing under ticker 0625.HK, with the stock priced at HK$48.56 giving Shein a market capitalization of roughly $26.5 billion.

The company's business model — shipping low-cost apparel directly from Chinese manufacturers to global consumers — has been disrupted by changes to U.S. de minimis rules and European customs enforcement. These regulatory shifts have raised costs and complicated the logistics that made Shein's ultra-fast fashion model profitable. The company has also had to navigate a complex regulatory path to listing, including securing approvals from Chinese authorities before proceeding with the Hong Kong offering.

The gray-market performance weighs on Hong Kong's IPO pipeline. Investor appetite for consumer discretionary names remains selective, and Shein's debut will test whether the market can absorb large consumer IPOs at meaningful valuations, particularly as global investors rotate toward artificial intelligence and robotics themes. A weak first-day showing could also dampen sentiment for other Chinese consumer companies weighing Hong Kong listings.

The pricing gives Shein an enterprise value of $26.5 billion, a steep discount to its 2022 private valuation and to peers like Zara owner Inditex. First-day trading on Tuesday will test whether institutional demand can stabilize the stock above its offer price.

This article is for informational purposes only and does not constitute investment advice.