China’s tightening scrutiny on tobacco industry wipes off US$28 billion in market cap of top e-cigarette players Smoore, RLX
- Smoore plunged 27.1 per cent in Hong Kong on Tuesday, after Beijing said rules on sales of e-cigarettes and ordinary tobacco products would be standardised
- RLX Technology sank 47.8 per cent overnight on the New York Stock Exchange, erasing US$2.6 billion from the net worth of its founder
China has sent another warning shot to investors that its regulatory scrutiny on markets is hardening, after a draft guidelines on monopoly law in the tobacco industry triggered over US$28 sell-off in its two of its biggest e-cigarette players.
Smoore International Holdings, the world’s biggest maker of e-cigarettes, plunged 27.1 per cent to HK$48.1 in Hong Kong on Tuesday. RLX Technology, China’s largest e-cigarette brand, sank 47.8 per cent overnight on the New York Stock Exchange.
Smoore lost HK$106 billion (US$13.64 billion) in market cap, while RLX shed US$14.45 billion on the NYSE on Monday.
New categories of cigarette products such as e-cigarettes will now be regulated like ordinary tobacco products, according to draft regulations posted by the Ministry of Industry and Information Technology on its website after the market close on Monday. Authorities are seeking public comments on the draft regulations until April 22.
The regulations are aimed at enhancing the laws to protect teenagers and learn from e-cigarette related policies of other nations, the statement said. Beijing is also targeting other issues plaguing the industry, such as quality and safety problems and fake advertisements, to protect consumers, it added.
The move shows China is unrelenting in trying to police market behaviours, after a clampdown on Internet platform operators like Ant Group, Alibaba Group Holding and Tencent Holdings from late last year contributed to a sell-off in Chinese tech stocks.