HONG KONG (Reuters) – Asia’s army of equity capital bankers are betting on a stream of listed companies seeking fresh funds, including Alibaba’s plans for an up to $20 billion Hong Kong share sale, as trade tensions continue to weigh on the big business of taking firms public.

Proceeds from IPOs in Asia-Pacific halved in the six months ended June to $22.5 billion, data from Refinitiv shows.

Overall equity capital raising volumes fell by 26%, even as companies including newly-listed technology stocks sought fresh funds via follow-on offerings and convertible bonds.

Bankers said IPO volumes were weakened by volatile markets amid the ongoing U.S.-China trade tensions.

“Investors have become more cautious about valuations,” said Li Hang, head of global equity capital markets and syndicate at investment bank CLSA.

“They show less interest in deals and tend to wait longer instead of giving an early indication of interest unless it’s a must-hold stock,” he added.

Not even one IPO made the biggest 10 equity market deals so far this year in Asia-Pacific. The $1.2 billion initial public offering by Ningxia Baofeng Energy Group Co Ltd (600989.SS) in Shanghai in April was the 11th biggest equity deal.

The two biggest equity deals were the $6 billion and $3.9 billion raised via convertible bonds by China Citic Bank (601998.SS) and Ping An Bank (000001.SZ), respectively.

Hong Kong exchange was still the busiest in the region for IPOs, with $7.3 billion to its credit, Refinitiv data shows.

That includes the $1 billion raised by generic drugmaker Hansoh Pharmaceutical (3692.HK) but not the up to $1.24 billion expected for logistics property developer ESR Cayman, which pulled its deal this month amid shaky markets.

“There are a lot fewer elephant-sized IPOs in the pipeline and the long list of smaller deals will need a more stable market backdrop for many of them to complete,” said Alex Abagian, co-head of Asia Pacific equity capital markets at Morgan Stanley.

ALIBABA SPURS HOPES

By far the largest upcoming deal is the expected Hong Kong listing by Alibaba (BABA.K) (BABA.N), which would be the biggest secondary share sale globally in seven years.

The U.S.-listed e-commerce giant has filed confidentially for the deal, expected in the coming months.

Alibaba’s plan is also notable for being the first tech company to use a 2018 rule change in Hong Kong aimed at tempting New York-listed Chinese companies to list closer to home.

The Hong Kong exchange is taking a patient approach to hope that others might follow Alibaba’s lead.

“It’s a complicated matter for these companies,” said Christina Bao, HKEX’s head of global issuer services. There are “a lot of moving pieces – not just within the company but also in the capital markets and in the macro environment”.

Follow-on and convertible offerings have dominated Asia’s equity capital raising this year, helped by companies’ need for financing despite market turmoil and the fact that many recent tech IPOs raised less than they had hoped.

Chinese EV maker NIO raised $650 million via a convertible bond in January, just four months after a $1.15 billion IPO, while game streaming group Huya Inc (HUYA.N) raised $327 million in a follow-on share offering in April.

While convertible activity has quietened as interest rates eased, the products are popular in a rising rate environment and bankers believe the boom in such fund raising will continue.

“If you’re a high growth company, having alternative sources of capital to tap into – such as convertible bonds – to fund that growth is important,” said David Binnion, co-head of equity capital markets in Asia ex-Japan at Goldman Sachs.

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