China’s stock market has plunged for a fourth day in a row – its worst performance since the 2007 crash. While FTSE 100 companies were seen to rally overnight, the economic landscape continued to look increasingly gloomy for businesses with large exposure to China, including cosmetics companies.
US-traded Jumei International, China’s number one retailer of beauty products, has seen its stock knocked hard as a result of the Chinese market slump. TheStreet reported that Jumei’s shares are down by 15.82% to $9.90 in mid-day trading on Monday and, yesterday, downgraded its stock from “hold” to “sell”. Over the past 200 days, Jumei’s stock price has plummeted 54.06%.
Meanwhile, Alibaba Group, an e-commerce company with a strong cosmetics and fragrance offering, has also been heavily impacted. On Monday – dubbed China’s ‘Black Monday’ – Alibaba’s stock dropped below its IPO price for the first time since the company went public last year. Its stock fell 3.5% to $65.80, slicing $5bn off its market value, The Wall Street Journal noted.
The story was similar with Chinese discount retailer Vipshop. Vipshop Holdings shares were down by 1.23% to $17.61 in late afternoon trading on Monday, according to TheStreet. Looking at the bigger picture, the company has lost 11.95% in the past four weeks.
However, TheStreet gave Vipshop Holdings a “buy” rating because of “several positive factors, which ... should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
China’s stock market has been declining rapidly in recent weeks. China’s Shanghai Composite Index closed trading on Black Monday down by 8.5% – its worst one-day performance since 2007. The crash follows the recent surprise yuan devaluation earlier this month. For more on this story, click here.