How the London Stock Exchange lost Shein

Fast-fashion retailer Shein is about to make its debut as a listed company. It is floating on the Hong Kong market at the end of this month, with a target valuation of between $25 billion and $30 billion. It remains to be seen whether it can get that away successfully, but it looks like a missed opportunity for the City of London.

Shein initially explored a listing in New York, and when that looked troublesome, switched its focus to the City. Over the course of 2024 and 2025, Shein was trying to get approval for its initial public offering (IPO) here. It jumped through all the hoops, but more and more questions kept being asked about whether it was suitable for the London market.

The UK Sustainable Investment and Finance Association, for example, objected that London must “uphold strong governance standards”. Liam Byrne, the then chair of the House of Commons Business and Trade Committee, wrote to the stock exchange to demand it put tests in place to “authenticate statements” by firms seeking to list, “with particular regard to their safeguards against the use of forced labour”. The questions went on and on, but the message was clear. Shein did not look like the right sort of company for the privilege of listing on a bourse as distinguished as the LSE.

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Shein has legitimate questions to answer… but so what?

Seriously? Looking back, it has to be asked what the critics could possibly have been thinking. It is legitimate to ask questions about Shein’s business model. When you are selling summer dresses to teenagers around the world for a fiver or less, you are probably not paying the workers in the factory a fortune. There are concerns about its supply chains, about its governance standards and its relationship with the Chinese government. It is probably not a company that many of us would want to work for, or even buy stuff from.

But so what? The harsh reality is that the London stock market is in terrible shape. More companies have left it than joined in every year since 2022. In the last 20 years, the number of companies quoted on the main market has fallen from more than 1,700 to less than 1,000. In 2024, London dropped to 20th place globally for IPOs, overtaken by Oman and Malaysia among many others. Almost every week brings news of another major company accepting a takeover from a foreign bidder – easyJet was the latest example – and each time it happens the market gets a bit smaller. On its current track, the City is trapped in a vicious cycle. The market gets smaller and smaller, global investors have less incentive to pay any attention to it, valuations remain low, and more companies decide to leave, or else never list their shares in the first place.

The London Stock Exchange is trapped in a vicious circle

A Shein IPO was a chance to break out of that. Whatever its faults, it is a huge player in the global fast-fashion industry, and has millions of loyal customers around the world and a formidable business model. It has made online retailing work in a way that few of its competitors have been able to. At a $30 billion valuation, it would have been one of the biggest IPOs in Europe this year, would have leapt straight into the top half of the FTSE 100, and would have added a major technology company to an index that is dominated by a handful of ageing banks, oil companies and pharmaceutical conglomerates.

Shein would have put the London market back on the map and stirred up some interest from global asset managers who have largely forgotten it even exists. In its wake, a lot more of the fast-growing Asian technology companies might decide that London was a pretty good place to list their shares after all, and investors buying Shein might well decide there were a few more companies on the same market that were worth adding to their portfolio too. Valuations would start to rise, the market would recover, and it would become a more attractive place for entrepreneurs to list their business. A vicious circle could have been replaced with a virtuous one. As it is, the London market must make do with ridiculous and self-important moral posturing that no one is listening to anyway.

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