29/05/2025

BIZ & FINANCE THURSDAY | MAY 29, 2025

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Shein plans to go public in Hong Kong this year

Japan’s Expo 2025 draws five million visitors in first six weeks TOKYO: The World Expo in Japan’s Osaka has welcomed five million visitors in its first six weeks, organisers say, despite lukewarm enthusiasm for the event ahead of its opening. A Mars meteorite and a beating artificial heart grown from stem cells are among the displays at Expo 2025, where more than 160 countries, regions and organisations are taking part. The event opened on April 13 and runs until mid-October, with most of the pavilions encircled by the world’s largest wooden architectural structure, a latticed “Grand Ring”. On Monday, the five millionth visitor entered the vast waterfront site, organisers said in a statement. “The number of visitors to the Expo ... increased from four million to five million in seven days,” they said, adding that more visitors were coming “with each passing day”. So far 12.4 million tickets have been sold to the event. Organisers have set a total target of 23 million. Also known as a World’s Fair, the Expo phenomenon, which brought the Eiffel Tower to Paris, began with London’s 1851 Crystal Palace exhibition. It is now held every five years in different locations around the globe. Osaka last hosted the Expo in 1970 when Japan was booming and its technology the envy of the world. It attracted 64 million people, a record until Shanghai in 2010. – AFP HK regulator prods pension funds on implications of US rating downgrade HONG KONG: Hong Kong’s pensions regulator has told the city’s pension funds they may need to adjust their investment portfolios to reflect the impact of a downgrade to the US sovereign credit rating, according to a statement. Ratings agency Moody’s cut America’s pristine sovereign credit rating by one notch earlier this month, the last of the major ratings agencies to downgrade the country, citing concerns about the nation’s growing US$36 trillion debt pile. Pension funds regulated by Hong Kong’s Mandatory Provident Fund Schemes Authority are not allowed to invest more than 10% of their total assets in US Treasuries if the US is downgraded from its “Aaa”rating by an approved agency. The Authority said it sent a reminder “recently” to pension funds about staying in compliance with the rules and protecting their members’ interests, in light of “significant market events”. Investment managers “must formulate suitable compliance contingency plans and make timely and orderly adjustments to their asset allocation in response to possible market developments”, the regulator said, responding to a query from Reuters about what it had told fund managers. Bloomberg News reported last week that Hong Kong pension fund managers have flagged the risk of potential forced selling of their Treasury holdings after the Moody’s downgrade. – Reuters

o Proposed London IPO failed to secure green light from China regulators HONG KONG: Shein is working towards a listing in Hong Kong after the online fast-fashion retailer’s proposed initial public offering (IPO) in London failed to secure the green light from Chinese regulators, said three sources with knowledge of the matter. The China-founded company aims to file a draft prospectus with Hong Kong’s stock exchange in the coming weeks, one of the sources said. Shein plans to go public in the Asian financial hub within the year, two of the sources said. Shein plans to change the listing venue as it had not yet received approval for its London IPO from Chinese regulators, notably the China Securities Regulatory Commission (CSRC), the two sources said. The company, which sells products including US$5 bike shorts and US$18 sundresses, in March secured approval from Britain’s Financial Conduct Authority (FCA) for its IPO in London, and soon informed the CSRC, one of the sources said. The company initially expected the green light from Chinese regulators to follow swiftly after the FCA but has since experienced an unexpected delay and limited communication from the CSRC, said the source. Details about Shein’s Hong Kong listing plan have not been reported previously. All the sources spoke to Reuters on the condition of anonymity as they were not authorised to speak to the media. Shein and CSRC did not immediately respond to Reuters request for comment. A spokesperson for Hong Kong Exchanges and Clearing Ltd (HKEX) declined to comment on individual companies. Before its attempt to list in London, Shein had pursued a listing in New York, as part of its efforts to gain legitimacy as a global, rather than a Chinese company, and access to a wide pool of large Western investors. A listing in Hong Kong would go against that strategy and could hurt its global credentials. Allegations that Shein’s products contain cotton from China’s Xinjiang region and a planned legal challenge to the London IPO by a non-governmental organisation campaigning against forced labour in China have

Workers at a production line manufacturing clothing for Shein at a factory in the Chinese city of Guangzhou. – REUTERSPIC

complicated the London listing and risk embarrassment for the Chinese government, a separate source with direct knowledge of the matter said. Tensions with the US over trade only exacerbate the wariness of Beijing and the CSRC, the source said. The United States and NGOs accuse China of human rights abuses in the Xinjiang Uyghur Autonomous Region, where they say Uyghur people are forced to work producing cotton and other goods. Beijing has denied any abuses. Shein, founded by China-born entrepreneur Sky Xu, says it has a zero tolerance policy over forced labour and child labour in its supply chain. The company moved its headquarters from Nanjing, China, to Singapore in 2022. As it awaited a response from the CSRC, Shein earlier this month dropped the communications firms Brunswick and FGS it had hired to help with public relations ahead of the London listing. Reuters could not determine if Shein had sought or received a nod from the CSRC for the Hong Kong listing. The company had sought Chinese regulatory approval for going ahead with processes to list in New York and later in London. Shein’s filings with the CSRC make it subject to Beijing’s listing rules for Chinese firms going public offshore, two sources have said.

The rules are applied on “a substance over form” basis, giving the CSRC discretion on when and how to implement them, the sources added. Shein does not own or operate any factories, and instead sources its products from 7,000 third-party suppliers in China as well as some factories in other countries like Brazil and Turkiye. Shein’s aim was to go public in London in the first half of this year. But its business model of sending products straight from factories to shoppers around the world has been disrupted by the Trump administration ending duty-free access and slapping steep tariffs on e-commerce packages from China. The de minimis exemption allowed e-commerce packages from China worth less than US$800 to enter the US duty-free and helped Shein, Temu, and Amazon Haul sell clothes, gadgets and accessories extremely cheaply. Now, those parcels are subject to a minimum tariff of 30%. Regardless of where Shein lists, its eventual IPO valuation will hinge on the impact of the removal of the de minimis exemption, the sources have said. The US exemption is still in place for goods that are not from China or Hong Kong. – Reuters

Temu owner PDD first-quarter net profit plunges SHANGHAI: Chinese e-commerce giant PDD Holdings saw net profit almost halve in the first three months of the year as the Temu owner prepared for a blistering trade war between Beijing and Washington. Tuesday, PDD Holdings’ co-chief executive Lei Chen said the company made “substantial investments ... to support merchants and consumers” and deal with “rapid changes in the external environment”. The growth slowdown was “expected”, said PDD Holdings’ vice-president of finance Jun Liu, adding that the downturn was “accelerated by the changes in the external environment”.

The Shanghai-based company said net profit came in at 14.7 billion yuan (RM8.5 billion) in the three months ending March 31, down 47% year on year. The drop came as the economic superpowers are locked in another bruising trade standoff that saw US President Donald Trump last month scrap a customs exemption for goods valued under US$800. The exemption was long a vital part of the business model supporting platforms offering low-cost goods like Temu. In a statement with the earnings release on

“These investments weighed on short-term profitability but gave merchants the room to adapt,” he said, insisting they were focused on “strengthening the (platform’s) long-term health”. The firm also saw revenue growth slow for a fourth straight quarter. It said revenue in the first quarter rose 10% on-year to 95.7 billion yuan. But that was down on the 24% growth recorded in the previous three months – and a severe drop from the 131% growth it saw at the start of 2024.

She warned that the company’s financial results “may continue to reflect the impact of sustained investments ... through uncertain times”. PDD’s New York-listed depository receipts plunged more than 13%. As part of a detente in the tariff standoff between China and the United States, Trump signed an executive order this month that set duties on de minimis items sent through the US Postal Service to 54% of their value, or a US$100 payment. A prior tariff had been set at 120%. – AFP