Shein moves the focus of the IPO to Hong Kong

The move puts additional strain on London's struggling stock market, which many had hoped Shein's IPO would help

In a further blow to the City's long-suffering IPO market, Shein appears to be abandoning plans to list in London and focusing instead on a Hong Kong listing.

According to reports, decision-makers at Shein were discouraged from listing in London due to the drawn-out approval process among Chinese regulators, shattering hopes that Shein's IPO could revitalize London's stock market.

Hong Kong has emerged as the fast fashion retailer's primary focus, according to Bloomberg, which cites people with knowledge of the situation. However, it is believed that a decision has not yet been made.

According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, "Shein's planned London listing has been mired in so much controversy that it's not overly surprising that the fast fashion giant might be throwing in the towel and looking set to launch in Hong Kong instead."

Shein's IPO value was once estimated to be around £50 billion, making it one of the biggest listings in London's history.

Rather, the London Stock Exchange, which is experiencing a decline in investor interest, might have to do without this possible windfall.

What obstacles does Shein have to overcome before a possible IPO?

Shein is looking for an appropriate IPO location, but the circumstances are far from ideal.

Global retailers have been negatively impacted by the tariff fiasco, especially those with strong ties to China, which appears to be the main target of President Trump's most harsh tariffs.

Even though the most severe reciprocal tariffs are currently being rolled back for 90 days, trade relations between the US and China are generally friendly. However, if a comprehensive trade agreement cannot be reached, tense trade relations between the two superpowers may resume.

Additionally, shipping tax exemptions for small packages are being reviewed. The tax exemptions for these have been reversed by Trump, and while the UK is conducting its own review, the EU appears to be planning to phase them out.

Taxes on its imports would be a huge blow to Shein's business because of the low prices that give it an advantage over other retailers.

These obstacles, along with the possibility of listing in London, where the IPO market is less active than in other markets like the US, had caused Sheins' potential IPO valuation to drop from the £66 billion it had previously raised venture capital.

Why would the IPO of Sheins be controversial?

Sheins' IPO was always met with opposition, even though it now seems less likely to happen in London.

Amnesty International called the proposed listing "a badge of shame" for the London Stock Exchange due to worries about forced labor in its supply chains.

The possibility of permitting Shein to list in the US, which had been its first option, was soured by worries about these aspects of the company's operations. Shein looked into other possibilities as a result, and London immediately emerged as one of the most desirable.

However, Chinese regulators' unwillingness to approve the deal may have been influenced by UK consumers' opposition to the listing.

According to Streeter, "Chinese regulators were reluctant to give the IPO the green light, in part because of the barrage of criticism, which looked set to intensify leading up to a London listing."

Shein has its headquarters in Singapore, but because the majority of its products come from China, it needs permission from the China Securities Regulatory Commission to list abroad.