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The last few days have provided more than their fair share of gloomy economic news. From the latest Japanese survey of major manufacturers to industrial production in Germany and to the service activity in the United States, the global slowdown is accelerating.
But the most powerful indicator was perhaps the stock market debut of the $ 24 billion Lyft transfer company, which have worrisome global implications, including for the first time. Asia. The Uber challenger was stuck in reverse during his first two days trading in New York – and since then he has shivered.
Lyft's performance in post-IPO transactions is a bad omen for Uber's upcoming debut on the market. And this will weigh on the confidence in other equity fundraising programs around the world, especially in Asia.
There is even a direct personal connection with the region: Lyft's largest shareholder is Hiroshi Mikitani from Rakuten, with a 13% stake. Coincidentally, the Japanese billionaire Masayoshi Son, of SoftBank, plays a similar role at Uber, where he holds 15%.
In fact, the positive sentiment in the Asian markets was already evaporating long before Lyft disappointed Silicon Valley, Wall Street and Tokyo.
The region's IPO market was booming in 2018. The trade war of US President Donald Trump, which had repercussions on the global economy, did not prevent companies from raising approximately $ 262 billion of equity and equity related instruments, including more than $ 99 billion IPO, according to PwC.
In Tokyo, Son's SoftBank launched SoftBank Corp., its mobile arm, and raised $ 23.6 billion. Meanwhile, the Chinese sensation on Xiaomi smartphones has sold shares worth $ 5.5 billion to Hong Kong. Singapore has made 13 IPOs, Vietnam five. Hong Kong leads the world with 125 IPOs totaling more than $ 36 billion, driven by the technology sector.
But a few months have made all the difference. The IPO sector in Asia had its weakest start to the year since 2016. Stock sales, from IPOs to convertible bonds, to subsequent transactions, plunged 41 $ 49 billion between January and March, according to the Refinitiv research agency. Bank charges related to first quarter equity market transactions in Asia were the lowest in the last six years.
The Asian investor community is rightly reducing its goals. The focus is now on the mundane activities of companies that may need additional capital. The conclusion is clear: 2019 will not be devoted to Asian IPOs, but to the more discreet work of the next capital increase. In other words, financial maintenance.
Among the companies that went public in 2018 and came back on the market: Chinese electric vehicle manufacturer NIO (which raised $ 750 million in convertible bonds in January), the video streaming company iQiyi ( $ 1.1 billion in convertible debt in early April) and E-commerce star Pinduoduo (a complementary offer of $ 1.6 billion in February).
The slowdown in IPOs in Asia could be a major economic indicator for what is waiting for the United States. Due to Brexit's disorder and slowing growth, Europe is also starting to slow down until 2019. The US is however expecting a big wave of Silicon IPOs – – including Uber, Airbnb and the Pinterest mobile app.
Lyft's performance in the post-IPO trade bodes ill for Uber's upcoming debut on the market.
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Trump's often baderted pride about "the strongest economy in the history of our country" ignores the intensification of the headwinds his policies generate around the world, including in Asia.
The quarterly "Tankan" survey of the Bank of Japan showed that the confidence of the largest manufacturers had plummeted in six years – from 12 in March to 12 in March. A survey by economists at Reuters finds that the index is still down four points in three months.
Last week, the International Monetary Fund warned that this was a "delicate moment" in the global economy. He expects a slowdown that requires a smart answer. "Handle with care," said Christine Lagarde, Executive Director of the IMF. "We must not only avoid political mistakes, but also take appropriate action."
Many missteps occur in Trump's Washington. The administration has not only done a lot of damage with its tariffs on Chinese goods worth $ 250 billion and its trade war with Beijing. But talking about 25% taxes on car imports, attacks by the US Federal Reserve and threats to close the southern border of America worsens the situation.
In addition, its badault on China strikes not only the Kingdom of the Middle East but also other Asian economies by disrupting supply chains.
The trade war is complicating China's ability to grow by 6% this year. His overseas shipments plunged 20.7% in February from the year before.
Certainly, economic trends do not move in a straight line. Last week, Chinese manufacturing resumed growth for the first time in four months. The Purchasing Managers' Index for the Caixin / Markit Manufacturing Sector increased from 49.9 in February to 50.8 in March, up from 50 marks.
Investors in Shanghai seem more attached to national stimulus efforts than they fear external risks. The benchmark of the city is up 6% over last year. But there could be a dose of wishful thinking in continental indicators that measure sentiment rather than economic reality. The dark clouds around Lyft are hard to ignore.
Here, Carl Icahn's actions may seem premonitory when the story of the IPO is written. The legendary US investor would have dropped its stake of about 2.7% in Lyft before listing on the Nasdaq in New York. His $ 150 million investment in Lyft in 2015, when the company had reached a value of $ 2.5 billion, would likely have exploded and would have cost about $ 500 million when he had owned it.
Icahn, it seems, was afraid that the company would make a roller coaster ride. The famous financier George Soros reportedly bought the shares, according to the Wall Street Journal. Only time will tell which billionaire has the best call.
The climate of the primary market in Asia suggests caution. Unstable markets and economic uncertainty have the effect of curbing issuers. The biggest stock market listing in Asia so far this year is only $ 687 million, according to the Indian Embbady's office, Parks REIT. The main Hong Kong IPOs planned for this year are non-Chinese companies. They may include the sale proposed by the brewer Anheuser-Busch InBev of a stake in its Asian interests, which could be worth $ 5 billion and give a boost to the new emissions market.
However, even if the beer agreement comes to fruition, we are far from the amazing day of 2018, when Hong Kong recorded the highest number of IPOs in eight years.
This does not mean that Uber's upcoming debut will fail for Son. His huge carpool bet, which also includes the Singapore-based Grab group, could indeed rake in more sums than Mikitani's salary. Rakuten announced it would realize a gain of approximately $ 990 million on Lyft's initial public offering during the quarter through March.
But investors, especially in Asia, are cautious.
William Pesek is an award-winning journalist based in Tokyo and author of "Japanization: What the World Can Learn from Lost Decades in Japan". The Society of Publishers in Asia has awarded him the 2018 Editorial Writing Award for his work on Nikkei Asian Review.
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