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Shock, horror! The media reports that the first fashion giant scene is likely to abandon London for Hong Kong for IPOs. Time to throw away some clothes out of despair (ideally a cheap polyester blend).
But really, no one should be shocked. If anything, the real surprise is that the UK worked so hard for the listings and the scene entertained London in the first place.
For months, Singapore-based e-commerce Juggernaut has been waiting for a sign-off from the China Securities Regulation Authority (CSRC) to list overseas. It remains unclear whether Hong Kong’s list will make regulators better. However, it was always clear that London’s debut was a nasty fit.
That’s what made the UK hype around this IPO so weird. The concept that the buoyancy of a single famous jumbo can save London’s struggling stock exchanges has always been far apart, especially when the company in question has as many luggage as Shein.
Some British politicians keen to boost the UK stock market were actively courting Shane and questioning their decisions. After all, this is the company that was originally targeting New York’s buoyancy, and only encounters strong regulations and political resistance. When it fell apart, London intervened as a fallback option, offering post-Brexit Britain the opportunity to showcase its openness and global reach.
However, actively pursuing a company that is as controversial as Shein is a considerable gamble. There is a huge difference between approving a listing that meets regulatory standards and actively pleading businesses for serious claims.
Had the IPO been moving ahead in London, Shane would have faced a very strong scrutiny of its labor practices, environmental footprint, and the wider implications of fast fashion. The company has been accused of consistently denialing it of sourcing clothing from areas tied to forced labor. NGOs had already urged British regulators to block flotation. The Financial Conduct Authority approved Shane for the listing, but the IPO never went for a walk in the Public Opinion Park.
From a scene’s perspective, pivots to Hong Kong make sense for three reasons.
Firstly, despite being headquartered in Singapore, Shane remains fundamentally a Chinese company. Its operations and supplier network is concentrated in China, and Hong Kong has long been the venue for Chinese companies seeking international capital, especially when access to the US stock market is limited. In contrast, London was not a natural choice for Asian publishers, even in its pre-Brexit heyday.
Second, Hong Kong offers a more controlled environment. Recent national security laws have wiped out protests. This means that the scene is unlikely to face the public backlash that we encountered in the UK.
Sheen may have wanted London’s buoyancy to provide a platform to protect business practices, but the disastrous grille before the party’s parliamentary committee in January and subsequent termination of the PR advisor suggests that the strategy is being grandly back-to-back.
Third, investors are interested in returns, not in stock exchange locations. The “needs” of the scene for Western lists has always been a misconception. Last month, Chinese battery giant CATL raised $5 billion in Hong Kong through a Regulation S-only stock offering, excluding US “qualified institution buyers.” However, the transaction was a huge success, attracting strong demand from global fund managers. Ultimately, Shein’s success depends on how investors value their stock stories.
However, Hong Kong is not a free pass. Global investors remain cautious about environmental, social and governance (ESG) issues, and Hong Kong’s rules are, if any, stricter and more normative than London’s rules. Wherever it lists, Shane will face investigation questions regarding the use of DE Minimas exceptions in supply chains, working conditions, and customs. Investors demand transparency regardless of venue.
For London, the decision to list the scene elsewhere is not a disaster, it is a check of reality. The UK has recently reformed its listing regime to “match-fit” but there is no single IPO that can address deeper structural issues that plague the capital market. Brexit has destroyed the city’s position as a global financial centre, but many government policies, including stamp duty, pension regulations and insurance regulations, continue to curb stock investment. The stagnant economy was no use either. These are not issues that the buoyancy of a single trophy can solve, not to mention controversial as Shein’s.
The cancelled IPO of Turkish soda ash producer We Soda in 2023 provides a useful parallel. When the intent to float in London was announced, the list was hailed as “rays of light” and “a much-needed boost” for the British market. Failures a few weeks later were all thrown in various ways as “a big blow,” “a fresh blow,” and “a different blow.” However, as FT Alphaville was paying attention to at the time, the valuation range was very unrealistic, and subsequent declines in performance have been revealed to investors. London didn’t blow it!
There are similar lessons in the obvious shift in the scene to Hong Kong. Sustainable growth in the UK capital market comes from continuous, systematic reform rather than a one-off PR coup. Shein’s Flotation may have generated thick trading fees and flashy media coverage, but it also poses a real risk of a reputational fallout for the city.
London would be better off tackling the root cause of its decline. The city needs to build a market that stands on its own strength. It’s not the one who desperately grabs after a deal that promises more trouble than they are worth.
