Shares of RLX, China’s largest e-cigarette brand, plunge in New York on news Beijing might tighten regulations

Draft regulations posted by Ministry of Industry and Information Technology suggest it will seek to regulate these products similarly to ordinary cigarettes

RLX shares were trading 40 per cent lower on the New York Stock Exchange as of about 10am local time

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A RLX store in Beijing. The company raised US$1.4 billion during its initial public offering in January this year. Photo: Reuters

Published: 10:45pm, 22 Mar 2021Updated: 7:17pm, 23 Mar 2021

The shares of RLX Technology, China’s largest e-cigarette brand, were trading significantly lower in New York on Monday, after Beijing signalled it would overhaul rules governing e-cigarettes and new tobacco products.

Draft regulations posted online by China’s Ministry of Industry and Information Technology suggest it will seek to regulate these products similarly to ordinary cigarettes. The ministry is seeking public comments on the draft regulations until April 22.

RLX’s shares were trading 40 per cent lower on the New York Stock Exchange as of about 10am local time, even as the benchmark S&P 500 index was trading higher.

The implications of the draft regulations could be wide-ranging as, with an estimated 300 million smokers, China is considered the world’s largest market for tobacco products.

RLX raised US$1.4 billion during its initial public offering (IPO) in January this year. It sold 116.5 million shares with a target price of between US$8 and US$10 a share. Its successful market debut turned its 39-year-old founder, Wang Ying, into a billionaire overnight with an estimated net worth of US$24.8 billion.

But tobacco companies are increasingly facing scrutiny from regulators in China. In November 2019, the country banned the online sales of e-cigarette products to prevent minors from buying them.

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