Momenta Weighs Hong Kong IPO Shift as U.S.-China Tensions Reshape Fundraising Strategies

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Summary:

Amid rising geopolitical tensions and expiring U.S. listing approvals, China's autonomous driving firm Momenta is exploring a 2026 IPO in Hong Kong, reflecting a broader strategic pivot among Chinese tech firms toward regional capital markets....

Strategic IPO Realignment Reflects Shifting Regulatory Landscape

Momenta, a major Chinese player in autonomous driving technology, is reportedly reassessing its initial public offering plans, considering a venue shift from New York to Hong Kong. According to multiple unnamed sources, the company is in early discussions with investors about launching its IPO in the Asian financial hub in 2026. This decision follows the expiration of its U.S. listing approval in June 2025, as recorded on the China Securities Regulatory Commission (CSRC) website. The change in direction is emblematic of the growing strategic divergence between Chinese tech firms and U.S. capital markets, a trend exacerbated by increasingly strained U.S.-China relations.

Although Momenta has denied confirming any final IPO decision or investor details, the potential move reflects the increasing causal influence of regulatory expirations and geopolitical risks on Chinese firms' capital-raising behavior. The expiration of the U.S. listing green light serves not merely as a procedural lapse but as a critical catalyst pushing the firm toward alternative financial centers.

Geopolitical and Regulatory Frictions Shape Market Preferences

Momenta’s situation is part of a broader pattern: Chinese companies are reassessing the U.S. as a viable fundraising destination due to mounting political scrutiny and legislative threats of delisting. These factors introduce substantial uncertainty around compliance and long-term investor access. While the correlation between geopolitical risk and IPO venue preference has long been observable, the pace and scale of exits from U.S. exchanges in recent years suggest an evolving causal pattern.

In contrast, Hong Kong has reasserted itself as the preferred offshore listing destination for mainland Chinese firms. With more than 230 filings for IPOs or second listings already in 2025 and approximately $20 billion raised surpassing the $11.3 billion raised in all of 2024 the city has overtaken New York as the world’s leading IPO venue in terms of volume. This shift is supported by favorable regulatory conditions, geographic proximity, and increasingly China-aligned capital structures.

Investor Interest and Global Collaborations Highlight Market Strength

Despite uncertainties around venue and timing, Momenta continues to attract significant attention from global automakers. The firm is backed by Toyota, Bosch, and may soon close a pre-IPO funding round involving Mercedes-Benz and Hyundai. While Momenta has not officially confirmed these participants, Hyundai publicly acknowledged its strategic interest in collaborating with the firm’s autonomous driving solutions in China.

Founded in 2016 by former Microsoft engineer Cao Xudong, Momenta has evolved into a cornerstone of China’s smart mobility sector. Its advanced driver assistance systems (ADAS) are used by global manufacturers such as Toyota, Audi, and Mercedes-Benz in the Chinese market. Furthermore, Momenta is expanding its international footprint, with a research center in Stuttgart and planned tests of Level 4 autonomous vehicles in Germany next year in partnership with Uber.

This expansion highlights the firm’s dual strategy: leveraging domestic dominance while gradually integrating into Western automotive ecosystems. In this context, a Hong Kong IPO would offer better alignment with both Chinese regulatory priorities and international investor access, avoiding the legal and financial volatility of U.S. exchanges.

A Pragmatic Reorientation Amid Global Capital Realignments

Momenta’s exploration of a Hong Kong listing, though still in preliminary stages, encapsulates a larger transition underway among Chinese tech companies. The pivot reflects a combination of regulatory timing, geopolitical frictions, and strategic positioning within a rapidly evolving electric and autonomous vehicle landscape.

While the firm remains officially noncommittal, the underlying drivers for the IPO venue shift appear more structural than situational. The move is not only a reaction to expiring permissions or political risks it represents a calculated reorientation toward more stable, accessible, and regionally integrated financial environments. As Chinese suppliers increasingly define the technological backbone of next-generation vehicles, their capital strategies are evolving in lockstep with the realities of global financial power dynamics.

Source: Reuters

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US dollar

The US dollar has recovered thanks to the Fed chair’s reluctance to signal a rate cut in October, a correction in stock indices, and rising geopolitical risks. Each of the USD’s main competitors has its own Achilles heel. The euro is disappointed by Friedrich Merz’s fiscal stimulus measures. The leadership battle in the Liberal Democratic Party weighs down the yen. The pound is concerned about the Treasury’s ability to plug a £35 billion hole in the budget.

Scott Bessent expressed surprise that Jerome Powell did not signal further rate cuts in October. According to the Treasury Secretary, the federal funds rate should fall by 100-150 basis points before the end of 2025. However, many FOMC members are concerned about the possibility of accelerating inflation. The split within the Fed is playing into the hands of the US currency.

The greenback continues to act as a safe-haven asset, and the United States is a net exporter of energy commodities. Therefore, rising oil prices amid increasing geopolitical risks have provided support for the USD index.

Stock indices

The fall in US stock indices resembles a sell-the-fact after a large-scale buy rumour after the Fed has lowered its rate. After the S&P 500 rose on news of Oracle and NVIDIA’s deals with OpenAI, asset managers bought $58 billion worth of US stocks. This is the largest inflow since the beginning of the year. This seems logical against the backdrop of numerous record highs for the broad stock index.

As soon as the S&P 500 took a step back, the bulls became nervous. Jerome Powell contributed to the pullback. The Fed chairman said that US stocks are overvalued. Until then, the markets had not attached any significance to the Price-to-Earnings Ratio rising to 22.9. The broad stock index has only traded above this level twice this century — during the dot-com crisis and the pandemic.

Bank of America notes that 19 out of 20 fundamental valuation metrics for the S&P 500 indicate that the market is overheated. However, corporations’ current positions look much better than in the past, so the current valuations may be justified. This gives investors the opportunity to use the good old strategy of buying on dips.

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Next Phase of Digital Euro Project Targets Financial Sovereignty

The European Central Bank (ECB) announced it will initiate a fresh round of experiments in 2026 to assess advanced use cases for the digital euro. This move represents a significant step in the ECB’s broader strategy to protect the euro zone’s financial sovereignty and reduce its reliance on external payment infrastructures, particularly those under U.S. control.

The decision follows a series of tests conducted throughout 2025 in collaboration with private-sector partners. These trials demonstrated the digital euro’s potential to enable seamless, automated transactions in specific public service contexts, including public transportation and instant government reimbursements. These findings establish a preliminary causal link between digital currency infrastructure and improvements in transaction automation and public sector efficiency.

Focus on Public Applications and Technological Readiness

While the digital euro remains in its developmental phase, the ECB appears focused on real-world applications rather than speculative or crypto-driven uses. The pilot use cases explored this year were designed to highlight how a central bank digital currency (CBDC) could serve the public interest by embedding smart automation into everyday transactions.

The nature of the experiments suggests the ECB is not merely reacting to technological trends but is proactively shaping a sovereign, euro-backed alternative to widely adopted private payment systems such as Visa, Mastercard, and U.S.-based fintech solutions. This effort underscores the relationship between technological innovation and monetary independence in an increasingly digital global economy.

Digital Euro as a Policy Instrument, Not a Speculative Asset

By framing the digital euro as a central bank-issued wallet rather than a decentralized cryptocurrency, the ECB signals its intent to maintain monetary control and regulatory clarity. The centralization of issuance distinguishes the digital euro from other digital assets and suggests a deliberate effort to build a stable, programmable payment layer on top of existing financial infrastructure.

This approach is closely related to the ECB's long-standing mandate to maintain price stability and financial stability across the euro area. The current experiments are part of a broader policy arsenal aimed at adapting monetary systems to the demands of a digital economy while preserving trust in central institutions.

ECB Moves Cautiously but Strategically Toward a Digital Future

The ECB’s decision to proceed with further experiments in 2026 confirms that the digital euro is no longer a theoretical concept but a strategic tool in development. While there is no commitment to full implementation yet, each testing phase builds critical knowledge about how to integrate a CBDC into the euro zone’s existing economy.

This cautious but structured approach allows the ECB to retain optionality while preparing for potential future disruptions to cross-border payments, data privacy, and monetary sovereignty. The experiments are thus not only technical in nature they are foundational to shaping the geopolitical future of the euro in a digital age.

Source: Reuters

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India Emerges as a Critical Trade Partner for Taiwan

Taiwan is intensifying efforts to expand its economic footprint in India, setting an ambitious target to double chip and electronics exports to the South Asian nation over the next five to seven years. According to James C. F. Huang, Chairman of the Taiwan External Trade Development Council (TAITRA), this growth trajectory is underpinned by India’s booming smartphone exports to the United States, which reached $8.43 billion in just the first five months of the fiscal year beginning April 2025. This marked a nearly 40% increase year-on-year, largely driven by demand for Apple’s iPhones.

This rise in exports is not coincidental but rather a consequence of favorable tariff exemptions currently extended to Indian smartphone shipments entering the US. The correlation between rising US demand and Taiwan’s export ambitions to India reveals a causative dynamic: the growing US appetite for smartphones, coupled with tariff policies, incentivizes greater manufacturing activity in India where Taiwanese technology and investment are increasingly embedded.

Taiwanese Investment and India’s Manufacturing Push

Taiwanese firms have cumulatively invested approximately $5 billion into Indian manufacturing. These investments include high-profile projects such as the $11 billion partnership between Powerchip Semiconductor and Tata Electronics to establish India’s first AI-driven semiconductor fabrication plant in Gujarat. This project aligns with India’s $10 billion incentive program to bolster domestic chip production, suggesting a strong causative link between government policy and Taiwan’s accelerated involvement.

In a parallel move, Foxconn, Apple’s key supplier, announced a $1.5 billion investment into its India unit earlier this year, signaling a shift away from production dependence on China. The strategic relocation not only mitigates geopolitical risks tied to tariffs but also solidifies India’s role as a manufacturing alternative.

Expanding Trade Resilience Amid Policy Uncertainty

Despite concerns about potential US tariffs on Indian goods in the future, Huang dismissed the notion that such policies would negatively impact Taiwan-India trade relations. He emphasized India’s large domestic market, its burgeoning demand in sectors like petrochemicals, textiles, and electronics, and its overall attractiveness as a trade and investment destination.

The confidence expressed by TAITRA points to a belief in structural resilience within the Taiwan-India trade corridor. In other words, while there may be correlation between US trade policy shifts and investor sentiment, Taiwanese stakeholders appear to prioritize India’s long-term industrial trajectory over short-term tariff risks.

Building a Localized Supply Chain

Taiwan’s export performance in India reached over $10 billion in 2024, led by semiconductors, electronics, and machinery. This figure represents more than double the $4 billion level recorded just five years prior. Huang indicated that Taiwanese firms are not only increasing exports but are also bringing more components into India and investing in domestic supply chains.

This move illustrates a deeper integration strategy: Taiwan is no longer viewing India purely as an end market but as a production and logistics hub for global operations. The cause of this shift lies in India’s maturing manufacturing ecosystem and policy support, which aligns with Taiwan’s need to diversify production away from China.

Strategic Alignment for Mutual Growth

Although India and Taiwan lack formal diplomatic relations, their deepening commercial ties suggest a pragmatic and mutually beneficial partnership. India is actively seeking Taiwanese investment to accelerate its technological capabilities, particularly in semiconductors, while Taiwan finds in India a stable and tariff-resilient platform to support its global trade interests, especially in light of fluctuating US-China dynamics.

The strategic alignment is therefore more than coincidental it reflects a deliberate response to shifting geopolitical currents, changing tariff structures, and the growing interdependence of global supply chains.

Source: Reuters

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Market Reaction in Asia

Most Asian indexes retreated, with Japan’s Nikkei 225 declining about 0.3% to 45,629.79. Pharmaceutical stocks were hit particularly hard: Sumitomo Pharma dropped 5.2% and Chugai Pharmaceutical fell 3.9%. South Korea’s Kospi tumbled 2.5% to 3,384.58, marking a third consecutive day of losses, amid growing anxiety over prolonged tariff negotiations with the U.S. In China, Hong Kong’s Hang Seng index fell 0.7% to 26,313.66, while the Shanghai Composite eased 0.1% to 3,850.07. Australia’s S&P/ASX 200 gained 0.2% to 8,790.20, whereas India’s BSE Sensex dropped 0.7% and Taiwan’s Taiex lost 1.5%.

Wall Street recorded its third straight decline on Thursday, with the S&P 500 down 0.5% to 6,604.72, the Dow Jones Industrial Average dropping 0.4% to 45,947.32, and the Nasdaq composite falling 0.5% to 22,384.70. Markets faced pressure from stronger-than-expected U.S. economic data, which could reduce the likelihood of multiple Federal Reserve rate cuts in the coming months. The Fed’s first rate cut of the year, delivered last week, had fueled expectations for further easing, supporting record-high stock prices. However, slower-than-anticipated cuts may intensify concerns that U.S. equities are overvalued after rapid gains.

Bond and Currency Movements

Treasury yields ticked higher, with the 10-year note rising to 4.17% from 4.16%. The U.S. dollar edged slightly lower to 149.73 yen from 149.75 yen, while the euro strengthened to $1.1676.

Oil prices climbed modestly, with U.S. crude adding 30 cents to $65.28 per barrel and Brent crude rising 25 cents to $69.67 per barrel, amid supply concerns and geopolitical tensions.

Stephen Innes of SPI Asset Management noted that Asia’s market rally, buoyed by a $15 trillion rebound year-to-date, now faces gravity as rising yields and stretched valuations heighten volatility. Traders are cautious as global growth remains strong but uncertainty around tariffs and U.S. monetary policy could dampen investor enthusiasm.

The combination of trade tensions, potential Fed policy adjustments, and high market valuations suggests continued caution for Asian and global equities in the near term.

Source: AP

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The US has agreed to consider granting tariff exemptions — specifically zero tariff rates — for several commodity products proposed by Malaysia, including palm oil and cocoa, which are expected to be finalised next month.Malaysia’s chief negotiator for the official tariff negotiations, Mastura Ahmad Mustafa, said the US is also considering zero tariffs for furniture, automotive parts and components, as well as aerospace parts and components.She said the US side had conveyed the matter in several prior negotiation sessions.

Mastura is the deputy secretary general (trade) of the Ministry of Investment, Trade and Industry (Miti).“As mentioned, we are currently in the process of detailing the agreement on reciprocal tariffs. Starting yesterday (Thursday), we have arranged several virtual sessions with the US to finalise the agreement.“In these negotiations, the US side indicated that they are open to considering several goods which, in their view, cannot be produced domestically in the US.

“For such products, they will consider granting exemptions in the form of zero tariffs under this unilateral tariff arrangement,” she told Bernama in an exclusive interview here on Friday.

Source: Theedgemarkets

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Markets

A two-day rally by the US dollar brought it to its highest levels in about a month. The trade-weighted index closed at 98.55 yesterday. EUR/USD dipped to 1.1666, extending the correction lower from mid-September’s failed attempt for a topside break from the sideways trading range. USD/JPY came just shy of the 150 big figure. Renewed dollar strength came on the heels of a strong set US economic data. US Q2 GDP was revised upwards on higher personal consumption and jobless claims for a second week straight unexpectedly dropped. The level (218k) was the lowest since July and sowed doubts on whether the labour market is as weak(ening) as the Fed currently believes. With a stronger dollar came higher US yields. Net daily changes varied between +5.1 (2-yr) and near-flat (30-yr). European yields rose as well, with the belly underperforming the wings. The 2-yr swap yields punched through the recent September highs to close at levels last seen early April, prior to president Trump’s Liberation Day. Gilts underperformed. Yields rose 6.6-8.8 bps across the curve with the long end slightly lagging the rest. Demand in a series of sub-par gilt auctions this week was the lowest in several years. While the DMO easily raised the amounts targeted, it does indicate markets’ declining appetite for gilts as we go into the annual Autumn Budget announcement end November. Sterling grinded lower. EUR/GBP’s closing level was the highest since end 2023 (0.8741).

Overnight news flow is dominated by President Trump announcing some new tariffs and reviving the trade topic in doing so. Branded pharmaceuticals will be slapped a 100% tariff, starting October 1. Exemptions are offered to companies that are either “breaking ground” and/or already constructing manufacturing sites in the US. Other tariff announcements include a 25% levy on heavy trucks and a 50% charge on kitchen cabinets and bathroom vanities. They are introduced under Section 232 of the Trade Expansion Act, so falling outside the scope of the reciprocal tariffs that are currently being investigated for its legality while remaining in place at least through October 14. The impact for regions such as the EU could (conditional tense intended) stay limited since the 15% trade deal struck with the US is considered to be overruling. The US is said to announce other duties as well in coming weeks, including on semiconductors and critical minerals. In the meantime and from a daily perspective, we’ll be looking at the release of the August PCE deflators. A slight acceleration is expected on a headline basis to 2.7% while the core measure should match July’s 2.9%. The attention is focused at whether or not we’ll see more tariff-related inflation filtering through. If so, that could further question the Fed’s ability to deliver two more cuts this year. Money markets aren’t so sure anymore and that’s been supportive to (ST) yields and the dollar. EUR/USD 1.1557/1.1573 serves as a first support.

News & Views

Inflation in the Japanese capital region declined by 0.1% M/M in September to stabilize at a downwardly revised 2.5% Y/Y. Consensus feared an acceleration to 2.8% Y/Y. Core measures slowed even more. Without fresh food prices, prices fell by 0.2% M/M (2.5% Y/Y stable). Also abstracting energy prices left them 0.3% lower (2.5% Y/Y from 3% Y/Y). Lower services prices (-0.4% M/M) contrasted with region goods prices (+0.2% M/M). The unexpected slowdown in Tokyo inflation has likely to do with local legislation (waiver of childcare fees for firstborns) and is unlikely to be repeated in national numbers to be released on October 24, one week before a potential pivotal Bank of Japan meeting (Oct 30; first rate hike since January?).

Dallas Fed president Logan made the case for modernizing the FOMC’s operating target rate. The FOMC began publicly targeting the fed funds rate in the mid-1990s which is now outdated. A repo rate would provide a more robust target and allow the Fed to adjust proactively and planfully. She proposes switching to the tri-party general collateral rate (TGCR) which is cleaner as it incorporates more than $1tn a day in risk-free transactions that represent a marginal cost of funds and marginal return on investment for a large number of participants.