Qualcomm-NXP Drama Rattles China TMT Firms' U.S. Listing Plans

(Bloomberg) -- After spending most of 2018 beating the market, recent U.S. listings by Chinese technology firms have been sinking since last week -- right as a trio of peers launched new initial public offering book builds of their own. The impact of a budding trade war may now be extending into the market for cross-border listings, including those expected to price tonight.

Pinduoduo Inc., Cango Inc. and Aurora Mobile Ltd. have spent the past nine days pitching investors on roughly $2 billion worth of initial public offerings on U.S. exchanges, which are scheduled to price after the market closes today. Cango today downsized its IPO to 4 million American depositary shares from 12.5 million. Aurora may soon follow suit, a person familiar with the matter said.

Since these companies started their IPO book builds last week, concern has continued to mount about a trade war between the U.S. and China. Perhaps most tangibly, NXP Semiconductors shares have sold off as China appeared less likely to approve its deal with Qualcomm Inc. Recent ADR listings including Huya Inc. and iQiyi Inc. have dropped alongside NXP.

The week’s largest IPO, Pinduoduo, is significantly oversubscribed despite the trade fears, people familiar with the matter said. But the supply of shares is smaller than it may appear, with Tencent and Sequoia Capital planning to buy nearly one-third of the $1.6 billion offering.

A surge in cross-border listings from China has been a reliable source of deal activity for underwriters. The rate of U.S. listings by Chinese firms has tripled over the past year, yielding double-digit returns on average.

--With assistance from Arie Shapira.

To contact the reporter on this story: Drew Singer in New York at dsinger28@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Brad Olesen, Richard Richtmyer

©2018 Bloomberg L.P.