(Bloomberg) — As in the U.S., initial public offering activity out of Asia has had its strongest-ever start to a year. That frenzy for new shares is likely to taper off as demand falls back to earth in the next few months.Asian companies, like their global peers, notched their best first quarter for listings ever, thanks to a flood of liquidity during the pandemic, super-low interest rates, and rallying stock markets. The firms raised $49.3 billion through first-time share sales at home and abroad — a 154% jump over the same period in 2020, data compiled by Bloomberg show.IPOs globally raised an unprecedented $215 billion, with almost half of that haul coming from the record wave of issuance by special-purpose acquisition companies in the U.S.Now, a global rotation out of highly-valued tech and health-care stocks that have dominated market activity, as well as fading excitement around SPACs in the U.S., is clouding the outlook for new deals.“Inevitably, there is a mark to market of comparable valuations,” said William Smiley, co-head of equity capital markets at Goldman Sachs Group Inc. in Asia ex-Japan. “In terms of our pipeline, there hasn’t been any significant impact from the recent rotation, but opportunistic issuance may have decelerated.”Asia’s IPO space faces an added challenge: the travails of Chinese tech firms, which dominate fundraising in the region. These companies are facing a crackdown against monopolistic practices at home and are also in focus as U.S.-China tensions keep rising. Last month, for instance, the U.S. moved forward with a law that could result in Chinese firms that don’t comply with U.S. auditing standards being kicked off American exchanges.The red flags are already there, with the investor mania seen earlier this year for deals like the one by Chinese TikTok rival Kuaishou Technology starting to die down.Chinese fintech company Bairong Inc., which raised $507 million, delivered the worst debut in three years among $500-million-plus Hong Kong IPOs when it fell 16% on Wednesday. U.S.-listed Chinese search giant Baidu Inc. and video-streaming service Bilibili Inc. raised a combined $5.7 billion through secondary listings in Hong Kong in March but had lackluster debuts.In contrast, investors were seen scrambling for a piece of Kuaishou’s $6.2 billion Hong Kong IPO, the biggest listing globally so far this year, and Korean e-commerce giant Coupang Inc.’s $4.6 billion float.READ: Cracks in Global IPO Market Emerge at Quarter’s EndHealthy ShakeoutThat said, muted investor appetite for listings isn’t affecting the queue of hopefuls.Online music company Tencent Music Entertainment Group, micro-blogging service Weibo Corp. and online travel service Trip.com Group Ltd. are among U.S.-traded Chinese companies seeking so-called “homecoming” listings in Hong Kong. These secondary listings, seen as a hedge against Sino-American tensions, raised $17 billion in Hong Kong last year and have amassed $6.4 billion so far in 2021.“The secondary listing trend will continue but what should be interesting to see is whether new issuers who ultimately want to get to a dual listing, perhaps consider seeking a dual primary listing in Hong Kong and the U.S. from the start rather than doing a primary U.S. listing, waiting two years and then coming to Hong Kong for the secondary listing” said Francesco Lavatelli, head of equity capital markets for Asia Pacific at JPMorgan Chase & Co.Tech and health-care firms make up the bulk of the listing pipeline in Asia, say bankers, even without the “homecoming” cohort, many of whom opted for U.S. listings because of the American investor base’s greater familiarity with new economy stocks. Among them: health-care startup WeDoctor, which is planning a multi-billion dollar Hong Kong IPO and China’s Uber-like startup Full Truck Alliance, which is looking into a $1 billion U.S. listing.“The pipeline remains quite robust but is centered around tech and growth stocks, which are obviously seeing a little bit of a re-rating,” said Tucker Highfield, co-head of equity capital markets for Asia Pacific at Bank of America Corp. “The thesis of good companies being able to buck the trend of volatility will continue and there’s capital available.”Ultimately, less frothy markets and a cooling of the IPO investor mania may actually be welcome.“Entering a more balanced market environment isn’t a bad thing. It can extend the issuance cycle and work to keep excesses in check,” Smiley said. “If there is going to be correction, you want it to be fast – a prolonged downturn kills issuance.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.