Trump trade war: Volvo delays IPO due to uncertainty

Workers
are seen on the side of an assembly line at the Volvo Cars
manufacturing plant in Daqing, Heilongjiang province, China June
8, 2018.
Reuters

• The parent company of Swedish automaker Volvo has
  postponed its planned initial public offering.
• Chinese car giant Geely is worried that President
  Trump’s trade war could impact Volvo’s valuation.
• Volvo’s IPO would have been the largest in Sweden in 17
  years.

Volvo, the Swedish automaker, has reportedly had its initial
public offering (IPO) plans delayed by its parent company as a
result of uncertainty surrounding US President Donald Trump’s
trade war.

The Financial Times reports on Monday that Geely, the Chinese
auto giant which owns Volvo, has paused plans for an IPO that
valued Volvo at $30 billion because Geely is worried US President
Donald Trump’s trade war could hurt its valuation.

“Conditions right now are not optimal to give certain upside for
the investors,” Hakan Samuelsson, Volvo’s chief executive, told
the FT. He added that the listing requires “stable market
conditions.”

“It’s important to know that we have headroom, so we can look the
investors in the eye a year after the IPO,” Samuelsson added. “It
is still an option, a very realistic option, but will not happen
immediately.”

The FT reports that though Geely believed it had secured the
backing of investors, it worried that Volvo’s stock could slip in
the immediate aftermath of the flotation, angering Swedish
pension funds. The IPO would have been the largest in Sweden
since telecoms firm Telia listed in 2001.

Geely, which also owns British sports car maker Lotus and the
company which manufactures London Black Cabs, sold more than 1.2
million cars in 2017.

The delay to Volvo’s IPO comes as Trump’s trade war with China
threatens to escalate. Late last week, the US consultation period
on the introduction of fresh tariffs on $200 billion of Chinese
goods ended,
with no decision so far on whether tariffs will be imposed.

Trump elevated trade-war rhetoric with China to a fever pitch on
Friday,
threatening tariffs on another $267 billion worth of Chinese
goods.

Speaking with reporters on Air Force One, Trump said
long-threatened
tariffs on $200 billion worth of Chinese goods would “take
place very soon”, with more on the way.

“I hate to do this, but behind that there is another $267 billion
ready to go on short notice if I want,” Trump said.

If Trump follows through with both threats, tariffs would be
imposed on $517 billion of Chinese goods coming into the US —
virtually every import. Last year, the US imported $505
billion worth of goods from China.