Pop Mart Falls 7% on Hang Seng Index Debut as Secondary Market Price Drop Triggers Selloff

TradingKey - Following a recent peak at new highs, POP MART (09992.HK) continued to decline, closing down 7.11% on Monday at HK$287.60.

This stock adjustment comes against the backdrop of widespread declines in secondhand prices for Labubu series products, with single-day drops ranging from 3 to 11 yuan. Taking the third-generation "Loyal" edition as an example, originally priced at 99 yuan, the lowest current secondhand market quote has fallen to 81 yuan.

POP MART's newly launched fourth-generation mini Labubu blind box series, after a brief period of speculation following its initial release, has also seen prices rapidly retreat. Some scalpers have announced strategy adjustments on social platforms, stating "we are temporarily suspending purchases of the Labubu series, as the entire product line's prices have fallen significantly, and we need to wait for market stabilization signals."

The significant decline in secondary market prices may indicate weakening consumer enthusiasm or impacts from supply strategy adjustments. Jeff Zhang, an analyst at Morningstar, noted, “Secondary market prices have been declining due to restocking and cooling demand for some series,” adding that growing negative feedback on new product quality is an issue the company needs to address promptly.

Beyond the direct factor of declining secondhand prices, POP MART's short-selling data has also risen significantly in recent days, with traders observing intensified investor selling pressure that has further amplified downward pressure on the stock price.

POP MART was officially included in the Hang Seng Index and Hang Seng China H-Share Index ETF on September 8, undoubtedly a significant milestone in the company's development. However, historical experience suggests that inclusion in indices often triggers profit-taking, which may also be a factor contributing to POP MART's stock decline on the 8th.

Regarding the current correction, market views are not entirely bearish. Morgan Stanley believes the stock adjustment actually provides a buying opportunity. The firm emphasized that POP MART's strong intellectual property (IP) engine, efficient direct sales model, and the retreat of artificially inflated resale prices will help the company return to a more sustainable and healthier development balance.

Despite facing short-term challenges, POP MART's rapid development over the past year remains remarkable, with its stock having surged nearly 500% over the past year.