Shein's IPO and China's PMI: What Changes for Markets

The Asian trading session on Monday provided a true picture of the contradictions currently marking the Chinese economy. On one hand, Shein is preparing to debut on the Hong Kong stock exchange after raising $1.7 billion in its IPO, with a valuation of $26 billion. On the other hand, China's industrial PMI rose to 49.8 in August, above expectations, but still below the 50 mark that separates expansion from contraction. The message is clear: there is money circulating, but the real economy is still struggling.

For those following global markets and trying to understand how Asian dynamics affect portfolios on this side of the world, the day brought signals that deserve a more careful reading than the headlines suggest.

What Shein's IPO Reveals About Risk Appetite in Hong Kong

The $1.7 billion raised by Shein is not just a story about fast fashion and cheap blouses. The figure places the company among the largest IPOs of the year and consolidates Hong Kong as the most active marketplace in the world for new listings in 2025. According to data compiled by Bloomberg, the city has already surpassed New York in the volume of initial public offerings in this cycle.

However, the $26 billion valuation represents a significant drop from the $66 billion the company was valued at in previous private rounds. This difference reflects both the stricter regulatory environment for Chinese companies listed abroad and the compression of multiples that has affected the global e-commerce sector over the past two years. As we analyzed in articles about the international market scenario, the discount between private and public valuation has been recurrent.

More relevant than Shein's individual case is the pipeline. Two other Chinese technology companies, Shenzhen Longsys Electronics and Excelland Robotics, filed documents to raise a combined $900 million in Hong Kong on the same day. The queue of listings signals that the Chinese capital market is finding in the former British colony a route to access international capital that Shanghai and Shenzhen do not offer with the same flexibility.

Industrial PMI Rises, But Contraction Persists

China's official industrial PMI advanced to 49.8 in August, slightly above the economists' expectation of 49.6. It is a marginal improvement, but the number is still below 50, which means manufacturing activity continues to contract.

To put it in context: China has accumulated consecutive months with the indicator oscillating around neutrality, failing to sustain a consistent recovery. Government stimuli, which include interest rate cuts and consumption incentives, have had a limited effect on the confidence of the productive sector. Domestic demand remains weak, and excess capacity in sectors such as steel and electric vehicles is putting pressure on margins.

In the stock market, the reaction was mixed. The Shanghai Composite rose 0.86% to 3,986 points, while the Shenzhen Composite advanced 0.6%. The Japanese Nikkei fell 0.1%, and the Hang Seng closed virtually unchanged, down 0.07%. The South Korean Kospi was a positive standout, up 0.46%, driven by semiconductor manufacturers Samsung Electronics and SK Hynix, which rose 1.2% and 1.3%, respectively.

BYD Falls 5.2% Despite Recovery in Profit

One of the most revealing movements of the day was the 5.2% drop in BYD's shares in Hong Kong. The Chinese electric vehicle manufacturer reported a recovery in second-quarter profit, but the market did not buy the thesis. The reason lies in the details: BYD's domestic operations continue to face the price war that has taken over the Chinese EV market, with margins under constant pressure.

Compensation has been coming from abroad. BYD has been aggressively expanding its international presence, and Brazil is a concrete example of this. The factory in Campinas, São Paulo, has reached the milestone of producing one thousand electric bus chassis, a historic mark that positions the company as a relevant player in the electrified public transport sector in Latin America. As we discussed in our coverage of the electric vehicle market, BYD's internationalization strategy is a direct response to the saturation of the domestic market.

The decline in stocks even in the face of better results illustrates a recurring pattern in Asian markets: when expectations are embedded in the price, the results need to significantly surprise to generate an increase. And BYD, despite its international advances, has yet to convince that it can maintain profit growth without relying on the Chinese market.

What This Means for Investors Here

For Brazilian investors, three readings are important. First, the flow of IPOs in Hong Kong indicates that global capital still sees opportunity in Asia, despite geopolitical tensions. The escalation of conflict in the Middle East, which weighed on risk sentiment during trading, was not enough to curb the appetite for new listings.

Second, the Chinese PMI below 50 is a warning for those exposed to commodities. China is the world's largest consumer of iron ore, copper, and soybeans. A manufacturing economy that cannot emerge from contraction means weaker demand for inputs, which could pressure the prices of commodities that support a large part of Brazilian exports. Those who follow the relationship between Chinese data and Brazilian assets know that this is a direct transmission channel.

Third, the performance of semiconductor companies in South Korea reinforces a trend that remains strong in 2025: the chip sector continues to be one of the most resilient in Asia, benefiting from global demand for artificial intelligence infrastructure. Samsung and SK Hynix rose while almost everything else remained sidelined.

The week promises more volatility with economic data from the United States on the radar. The behavior of Asian markets this Monday suggests that investors are in wait-and-see mode, positioning themselves tactically while awaiting clearer signals about the direction of U.S. monetary policy and the real health of the Chinese economy.

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