Key Points

• Hong Kong IPO window reopens: A rebound in listings and a 28% YTD Hang Seng rally are giving China-focused private equity long-awaited exit routes and improving sentiment toward discounted consumer assets.
• Europe’s rare earths dependency: Despite new EU plans to diversify, the bloc remains heavily reliant on China for rare earth magnets, leaving auto, wind and defense supply chains exposed in the near term.
• EQT doubles down on Asia: The private-markets giant is scaling investment across the region, targeting early-stage China and domestic-demand sectors (services, software, education) less tied to geopolitics.
• Caution into Nvidia/Fed minutes: U.S. futures edge lower as investors await Nvidia’s results and Fed minutes, with questions over AI valuations and softer odds of a December rate cut tempering risk appetite.

Hong Kong IPO Rebound Opens Exit Path for China-Focused PE

Hong Kong’s IPO revival is unlocking long-stalled exits for China-invested private equity funds, with $18.2B raised year-to-date through October and the Hang Seng up over 28%—well ahead of the S&P 500.

Managers say cheaper valuations and early signs of stabilizing consumer demand are drawing capital back to China, allowing investors to “buy growth at a discount” in leading domestic brands.

While M&A remains muted and onshore listings tightly controlled, Hong Kong provides a practical outlet, though a 300-plus application backlog may slow timelines.

Regulators’ promises to streamline offshore listings are a tailwind, but execution speed will be key.

Europe’s Rare Earth Reality: Reliance on China Persists Despite New Plans

Europe remains heavily exposed to China for rare earths and magnets used in EVs, wind turbines and defense, even as Brussels launches its “RESourceEU” plan to diversify through recycling, joint buying, stockpiles and new partnerships.

China still controls ~59% of mining, 91% of refining and 94% of magnet manufacturing, while the EU imports ~70% of rare earths, and nearly all magnets from China.

A one-year suspension of Chinese export controls buys time, but Europe lacks mining/refining capacity and faces slow approvals.

Early moves such as Estonia’s new magnet plant signal progress, yet supply-chain resilience will take years to build.

EQT Ramps Up Asia, Targets Early-Stage China and Domestic Demand Plays

EQT is expanding its Asia footprint, calling the region a key growth engine across private equity and infrastructure. After raising over $10B for its latest Asia fund and planning a ~$930M investment in Korea’s Douzone Bizon, the firm says on-the-ground presence is essential to capture local opportunities.

While large buyouts in China remain challenging, EQT sees stronger potential in early-stage deals tied to domestic demand: services, software, education, and financial services, reducing exposure to geopolitics.

Leadership also downplayed reliance on falling interest rates, pointing to recent exits and distributions as evidence of an “all-weather” approach focused on value creation.

Futures Slip Ahead of Nvidia Results and Fed Minutes

U.S. equity futures turned lower early Wednesday as investors stayed cautious before Nvidia’s earnings and the Federal Reserve’s October meeting minutes.

Tech remained under pressure on concerns that AI-driven valuations are stretched; Nvidia fell 2.8% Tuesday, with AMD, TSMC, Amazon, Microsoft and Palantir also weaker.

Retail lagged after Home Depot’s miss, pulling Lowe’s and Walmart lower ahead of their reports.

Rate-cut odds for December eased to ~43%, with delays to key data leaving policymakers with less visibility.

S&P 500, Nasdaq 100 and Dow futures slipped 0.2%–0.3%, while markets await Thursday’s delayed September payrolls for labor-market cues.

Conclusion

Markets are sending mixed signals.

On one hand, Hong Kong’s IPO revival is reopening exit paths for China-focused private equity and nudging sentiment toward discounted domestic consumption stories.

On the other, Europe’s heavy reliance on China for rare earths underscores persistent strategic supply risks.

Large allocators like EQT are leaning into Asia; especially early-stage, domestic-demand assets, while public markets turn cautious ahead of Nvidia’s results and the Fed minutes as odds of a December rate cut fade.

Positioning should emphasize quality cash flows, selective Asia exposure, and vigilance on supply-chain policy, with dry powder ready for opportunities created by earnings and data volatility.

Investment Insights

• Asia reopens for exits: Hong Kong’s IPO revival is easing bottlenecks for China-focused private equity. This supports valuation discovery and could recycle capital into new deals.
• Domestic demand > cross-border risk: In Asia, focus on businesses tied to local consumers (healthcare, education, software, services) that are less exposed to geopolitical swings.
• Supply chains still fragile: Europe’s reliance on China for rare earths remains a strategic weak point. Prioritize companies with diversified sourcing or credible plans to localize key inputs.
• AI enthusiasm, disciplined entry: With attention on Nvidia’s results and high expectations, favor firms with clear cash generation and practical AI adoption over headline promises.

Economic Calendar