Swedish automaker Volvo faced setbacks after its initial public offering (IPO) valued at $30 billion was suspended by Chinese auto multinational Geely. The move resulted from tensions caused by US president Donald Trump's ongoing trade war with Beijing, the Financial Times reported Monday.
Geely, Volvo's parent company, cited fears that Trump's trade war could adversely impact its valuation.
"Conditions right now are not optimal to give certain upside for the investors," Volvo CEO Hakan Samuelsson said as quoted by FT, adding that the IPO listing cannot proceed without "stable market conditions."
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"It's important to know that we have headroom, so we can look the investors in the eye a year after the IPO," Samuelsson said. "It is still an option, a very realistic option, but will not happen immediately."
Washington escalated trade tensions with Beijing September 7 by threatening $200 billion in trade tariffs and proposing an additional $267 billion, bringing total tariffs to $517 billion, which would cover almost every Chinese import to date.
The tariffs would "take place very soon depending on what happens," Trump said to reporters aboard Air Force One on Friday, adding that "there is another $267 billion ready to go on short notice if I want."
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Chinese investors pulled out of the IPO sale, citing worries that Volvo’s stocks could disrupt stock pensions following a broad-based drop in auto shares which pulled the Stoxx 600 Autos & Parts index. SXAP 15 percent lower this year, Reuters reported Monday. The listing could still take place in the future.
If successful, the IPO deal would have been the largest since Swedish telecom giant Telia made a similar offer in 2001.
Trump's global economic war forced French oil and gas giant Total to pull out of the South Pars 11 project, the world's largest gas field shared between Iran and Qatar, where it planned to invest $4.8 billion over 20 years. Total owned a 50 percent stake of the Pars 11 with Chinese state-owned China National Petroleum Corporation (CNPC), who owned 30 percent.
Trump's May 8 withdrawal from the Joint Comprehensive Plan of Action (JCPoA) and reinstatement of US sanctions forced Total to withdraw, with CNPC taking full control of the project.
