The anticipation was rife - China Zhongwang's IPO was expected to unleash pent up demand for Asian listings - but after sweeping across the globe, the swine flu may have also infected investor confidence.

While Zhongwang's IPO, which broke the global eight-month drought of billion-dollar IPOs by raising US$1.26bn, was the largest this year, it is still significantly short of Zhongwang's initial expectations of US$1.6bn. The law firms advising on the deal were Morrison & Foerster, Latham & Watkins, Richards Butler, Jingtian & Gongcheng, Commerce & Finance and Conyers.

According to Thomson Reuters, the year has so far seen a 96% drop in global IPO volumes, prior to the advent of the swine flu however, confidence was high that Zhongwang's IPO could lead to further activity. Mallesons Stephen Jaques Hong Kong-based partner Conrad Chan said that while growing market confidence has pushed more IPO and equity markets deals into the pipeline, much uncertainty remains, mostly due to the virus. "It seems that there has been some restoration of confidence but this is yet to be seriously tested," said Chan. "The outbreak of the swine flu might further complicate the already uncertain market conditions. We will have to wait and see if this will result in a global outbreak and whether new opportunities will present themselves for some industries, for example pharmaceutical, which could have an effect on capital markets activity."

Davis Polk & Wardwell's James Lin, meanwhile, believes the threat may not be as great as the 2003 SARS virus, which is a good example to see how fast markets could be turned. "Until we understand more fully the transmission and mortality rates of the swine flu, it is hard to predict how this will affect the capital markets," said Lin. "Depending on what happens in the next 48 hours, we should know whether it will turn the markets, similar to what happened in 2003 when over ten SARs cases were detected," he said.

Lin said that Zhongwang's downsizing of its IPO was due to broader issues facing the market, rather than solely the virus.  "China Zhongwang's IPO was a lot to place in this uncertain market, especially as some market observers are expecting another drop in the Hang Seng Index. It's not surprising the deal was downsized."

Both Chan and Lin agree that growth in equity markets was dependant on certain industries better equipped in the downturn.

"The general view is that there will be a handful of good companies in sectors less affected by the financial crisis, such as the online games industry, that will be able to complete their IPOs in 2009," said Lin. "But the days of the frothy equity capital markets - when many companies could go public with limited history but selling on the basis of growth potential - are over for some time. The recovery certainly won't happen until 2010, at the earliest."