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BEIJING, China — Jumei International Holding Ltd. tumbled the most on record on concerns that China's decision to cut taxes on imported consumer goods will reduce the pricing advantage of the domestic online seller of beauty products.
American depositary receipts of Beijing-based Jumei sank 14 percent to $21.78 at 2:51 p.m. in New York, the biggest slump since its U.S. debut in May last year. Package-tour booking site Tuniu Corp. dropped 9.6 percent after a worse-than-expected first-quarter net loss. The Bloomberg China-US Equity Index slipped 1.9 percent, halting a four-day gain.
China will lower import tariffs for clothing, skincare products and diapers by more than 50 percent on average starting June 1, the finance ministry said on Monday as the government seeks to boost domestic consumption. While Chinese shoppers will benefit, it may reduce the competitiveness of Jumei which relies on offering discounted international cosmetic brands to attract online customers, according to Rosenblatt Securities Inc.
“Jumei is more concentrated on products that will be charged lower tariffs than other online stores, so its price discounts maybe less attractive than before,” Jun Zhang, who oversees China research at Rosenblatt Securities, said by phone from San Francisco. “People may expect to see some impact on its sales because of the tariff rate change.”
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The company, which in September started an online platform for users to buy overseas cosmetics directly from manufacturers, expanded into cross-border baby and maternity products last month, Chief Executive Officer Leo Chen said May 22 on a conference call.
Trading volume of 10 million shares in New York was about fives times the three-month average, according to data compiled by Bloomberg. The slump cut Jumei’s rally this year to 59 percent.
Tuniu dropped to $18.38 in the biggest retreat since March. The Nanjing-based company said its net loss more than tripled to 233.1 million yuan ($37.6 million) in the first quarter as marketing expenses jumped 158 percent. Credit Suisse Group AG downgraded the stock to neutral from the equivalent of a buy on Tuesday.
The Deutsche X-trackers Harvest CSI 300 China A-Shares ETF advanced 2.9 percent to a record $53.60, after the Shanghai Composite Index surged the most since January 2008. The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., climbed 0.3 percent to $51.48.
By Belinda Cao; editors: Nikolaj Gammeltoft, Richard Richtmyer.
