When you have lost your appetite, the last thing you need is a feast. But US investors will have to decide whether to nibble on the upcoming Chinese tech flotations or wait for the bumper main course –Alibaba.
About half a dozen Chinese companies hope to list in the US during the next few months, but markets are already proving tough. Weibo, China’s Twitter-like microblog, was forced to cut the size of its Nasdaq deal last month. Weibo’s parent company, Sina, has seen its share price sink 42 per cent this year.
Others have also felt the pain. Search engine Baidu is down more than 10 per cent and Sohu is off a quarter, while online video site Youku Tudou has lost almost a third.
The stumble has not been unique to US-listed Chinese companies. Hong Kong-listed Tencent has had $20bn wiped off its market capitalisation since March. Software maker Kingsoft is down more than 20 per cent in the past month, while online gaming company Forgame has dropped 27 per cent.
With stocks so beaten up, those wanting to buy into China’s internet story will find plenty of items already on sale.
Now listing candidates have another thing to worry about – the $120bn behemoth that is the Alibaba IPO. Though details of the float remain vague, the deal is almost certain to break records.
At the lower end of expectations, Alibaba will raise a similar amount to Facebook’s $16bn. With a top estimate of $25bn, the ecommerce company could take the crown for biggest deal in history, bettering champion Agricultural Bank of China.
Some say the pending mammoth offering could cause pre-emptive indigestion, especially for smaller Chinese internet companies looking to do deals.
“From now until Alibaba gets done, I think it’ll be hard for a lot of companies to get mindshare, particularly the smaller ones,” says one tech sector banker. “Investors are generally on strike.”
Other than Alibaba, the biggest IPO in the pipeline is that of rival JD.com, which is looking to raise up to $1.7bn. That in itself would set a record for a Chinese deal in the US. It has so far drawn strong demand from US-based investors, who put in enough orders to cover the books before the roadshow even started.
Online cosmetics retailer Jumei is also on the road seeking to sell a $200m offering, while job-hunting site Zhaopin last week filed to raise $100m.
But some warn that the going could get tougher as the Alibaba deal gets closer.
“For the little companies, people have to take a hard look because we are at the tail-end of the IPO window. These companies do not have the same pedigree as?.?.?.?Alibaba and JD.com, which are big marquee names,” says Bill Kornitzer, portfolio manager of the Buffalo International fund.
However, there could be a silver lining to the Alibaba listing, even for the smaller players wanting to float. While unknown Chinese internet companies may have struggled in the past to convince investors to meet them, increased curiosity about the sector is likely to open many doors, says one banker.
With many US-based funds having already built exposure to Alibaba through buying shares in Yahoo or SoftBank, there may also be a desire to diversify into other companies.
The experiences of the past two US debuts offer a mixed picture. Cheetah Mobile, an internet security unit spun out from Kingsoft, rose in its first day of trading on the NYSE last week but has since fallen below its offer price.
Tuniu, a travel website, has had a better ride following its $72m raising. It jumped 12 per cent on its first day of trading and has run even higher since.
“Two days before we finished our roadshow, we saw Alibaba come and a correction in US stocks, especially Chinese-related stocks,” says Conor Yang, chief financial officer at Tuniu. “We did have some accounts adjust down their price of purchase or some accounts that cut back on orders.” However, investors ultimately “looked at the long term”, he adds, as they bid the stock up.
Weibo has also enjoyed a switch in sentiment, with its stock trading up 15 per cent since its debut.
Due to its size, the impact of Alibaba’s listing is more likely to be felt by similar-sized global internet stocks, says Josh Spencer, a portfolio manager at T Rowe Price.
“If it is going to be in someone’s benchmark, then you are worrying about allocation for Google and Amazon, not niche IPOs.”
即便是在市场预期区间的低端，阿里巴巴的融资规模将接近Facebook的160亿美元。而市场预期的最高值为250亿美元，这将使该电子商务公司有望取代中国农业银行(Agricultural Bank of China)，夺取历史最大IPO桂冠。
“人们对小公司冷眼相待，因为它们处于IPO队伍的尾部。这些公司没有阿里巴巴和京东等大牌企业的高贵血统，”Buffalo International基金投资组合经理比尔?科尔尼采尔(Bill Kornitzer)表示。
普信集团(T Rowe Price)投资组合经理乔希?斯宾塞(Josh Spencer)表示，由于规模较大，阿里巴巴上市更有可能影响市值相仿的跨国互联网公司股票。