Shares of footwear or shoe manufacturers Nike, Adidas and several other brands fell after China boycotted western fashion brands. Stocks slumped as investors worried about putting their money into these companies.
Quoting CNN Business, Nike’s shares fell more than three percent on Thursday (25/3) local time on Wall Street. On the other hand, Adidas shares sank more than six percent in Frankfurt.
Meanwhile in London, England, Burberry’s shares fell more than four percent. H&M shares were also observed to fall two percent in Sweden.
The political storm sweeping China started by posts on social media. It’s from a group associated with the ruling Communist Party.
As a result of this post, H&M made a statement that they found forced labor in September 2020 at their factory in Xinjiang, China.
In addition, human rights groups have repeatedly accused Beijing of detaining Uighurs and other Muslim minority groups. Where they are forcedly make products that fit into global technology and retail supply chains.
H&M and Nike Shares Can Still Rise
According to Bernstein Analyst Aneesha Sherman, China’s political ‘storm’ is likely to stop and H&M stocks are predicted to rise 1 percent. Meanwhile, Nike’s stock could increase by about 1.5 percent.
China accounted for about five percent of H&M sales in 2019. Sherman estimates that figure will grow to around 10 percent in 2020 as China’s economy is recovering faster from the coronavirus.
“In a year like this, even cutting five percent from the top line is a huge success when H&M is trying to recover,” said Sherman.
Other well-known fashion brands, such as Burberry, shot up even more because of the consumptive nature of people in China.
America-China tensions have not gone away since the Donald Trump era.
After Joe Biden took office, trade war tensions between the two superpowers were still ongoing. And this created challenges for Western companies operating in the Chinese market.