E-cigarette shares fall on regulations post

Zhu Shenshen
Share prices plummet after a draft is posted online which includes strict requirements and certifications on which firms and organizations can produce and sell e-cigarettes. 
Zhu Shenshen

E-cigarette shares fell on Tuesday on the expectation of more strict regulations that could curb sales. 

Shares of New York-listed RLX Technology Inc, China’s biggest e-cigarette vendor, plunged 47.8 percent to close at US$10.15. Hong Kong-listed Smoore International, which offers e-cigarette components and design, closed at HK$48.00 (US$7.62), a 27.2 percent decrease. Shenzhen-listed EVE Energy dropped 15.9 percent to close at 69.63 yuan (US$11.05). 

The Ministry of Industry and Information Technology and the China Tobacco Administration posted a draft online about strengthening regulation. It includes strict requirements and certifications on which firms and organizations can produce and sell e-cigarettes, similar to regulations governing tobacco sales. 

Stricter controls will bring more tobacco taxes and more protection for young people, Everbright Securities said in a note. 

A huge population of smokers and a booming online market made China a rapid growing e-cigarette market. 

China banned online e-cigarette sales in 2019, forcing firms to invest heavily in offline outlets. 

In January, RLX raised US$1.4 billion in an initial public offering in New York. It hasn’t commented on the new regulation move.

EVE Energy said it was a battery company with clients that include e-cigarette vendors. It doesn’t provide e-cigarette products directly, the company said in a statement. 

Shares of traditional tobacco companies surged on Tuesday.

China Tobacco International (HK) jumped 6.68 percent in Hong Kong to close at HK$18.52. Shenzhen-listed Shaanxi Jinye, which makes tobacco labels, surged by the 10 percent daily cap to hit 4 yuan. 

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