However, sources said that while the books were covered for the IPO earlier this week, JS Global could not secure enough solid orders and had to cancel the deal. Investors generally put in orders for more shares than they actually expect to receive in an effort to ensure they get a good allocation. Deals where those investors end up with more than their real demand often trade poorly to begin with or have to be cancelled as they are not allocable.
Investors have been wary of the impact of the trade war on the consumer sector, with Chinese consumers scaling back purchases on everything from smartphones to furniture, as income growth slows and debt levels creep higher. "The company has been trying to sell a story about US-China synergy, but several investors are concerned that trade tensions would weigh on its business prospects in both countries," said one of the sources. "Even at the low end, the deal is still not appealing enough." The marketed price range represented a multiple of 11.5-15 times JS Global's forecast 2020 earnings, said sources, who declined to be identified as they were not authorised to speak on the matter.
JS Global did not immediately respond to a request for comment. The IPO is the third sizable deal delayed in Hong Kong so far this year. AB InBev, the world's largest beer maker, pulled an IPO of its Asia-Pacific unit in July but then last month floated the business in the city's biggest listing this year.