HONG KONG (Reuters) – Chinese technology titans setting off in Hong Kong and New York are likely to experience a bumpy ride when trade tensions between the two largest economies persist and after a stellar first half capital purchases continue to pull oneself.
So far, there has been no significant impact of trade between the US and China with stocks listed on the Asia-Pacific Capital Market (ECM) at three-year highs and blockbuster IPOs such as Xiaomi's There are signs that smaller deals are being violated.
"What potential stock issuers may fall victim to in the tensions between the US and China is sentiment in broader stock markets, as investors count trade warfare among their two or three main problems," said Ashu Khullar, head of capital markets in Asia Pacific at the Citigroup.
This week, China's Qeeka Home, a provider of online interior design services, has postponed an initial public offering of $ 278 million, while in New York Uxin, a Chinese used car retail outlet, has halved its planned float by $ 225 million ,
Both changes were due to challenging markets, reported Thomson Reuters publication IFR.
"If volatility continues to rise alongside secondary market deterioration, smaller transactions may be expected to attract less interest due to liquidity constraints," said Alex Abagian, head of Morgan Stanley's equity consortium for the Asia-Pacific region, excluding Japan.
The broadest MSCI index for Asia Pacific equities outside Japan has narrowed 8 percent from a high in June and is in its fourth month of losses in five stocks amid reprisals against the US and China.
But overall, Asia's stock markets were "very receptive to issues … there were a number of very important IPOs, as well as large block trades," Khullar said, pointing to recent stock sales of billions.
Businesses and investors this year sold $ 141.6 billion in equity in Asia-Pacific, 22 percent more than a year earlier, and the highest since the first half of 2015, as ECM data from Thomson Reuters show.
Among the recent major deals was the $ 4.3 billion IPO of Foxconn Industrial Internet – China's largest onshore IPO for nearly three years – and the $ 1.2 billion listing of Mercari, a rare Japanese unicorn.
The shares of the flea market app operator increased in the debut by more than 70 percent.
For the time being, bankers are looking for the planned coming-out parties for a number of Chinese unicorns or start-ups valued at over $ 1 billion.
Smartphone giant Xiaomi raised $ 4.72 billion after listing in Hong Kong on Friday's largest technology float in four years in Hong Kong.
Other outstanding deals include approximately US $ 4 billion worth of Floats from Tencent Music, China's largest music streaming service, and Meitanan Dianping, an online food delivery and ticketing platform.
China Tower, the world's largest mobile operator, plans to raise up to $ 10 billion over the coming months.
Many of the deals follow recent groundbreaking listing reforms in Hong Kong paving the way for weighted technology companies and early stage biotechnology companies.
Wang Sheng, deputy head of global investment banking at Chinese investment bank CICC, expects Hong Kong's trading volume to double in the second half of the first half of the year.
At least 10 biotechs plan to float in Hong Kong, and some have dropped US IPO plans in favor of the city.
Asia's ECM volume, however, will barely benefit from Beijing's efforts to lure foreign listed Chinese technology giants home with new China Deposit Receipts (CDRs) in the near future, a process whose details are still in the final stages.
"Many people do not appreciate the complexity of CDRs – it's not just another simple form of stock offering," said James Wang, head of China ECM at Goldman Sachs.
"It's been a significant development over time needs to get all the pieces together. "
Report by Sumeet Chatterjee; Additional reporting by Julie Zhu; Arrangement by Jennifer Hughes and Himani Sarkar