The unpredictability of new US President Donald Trump is causing some investors to seek safety in defensive European equity names, market participants told ECM Pulse.

Although investors are being careful to avoid companies that could suffer from global trade tensions, names like HBX Group and Stada could benefit from a defensive stance.

In Europe’s largest listing of the year so far, sponsor-owned Spanish travel technology platform HBX Group is set to close IPO books today (10 February).

On the afternoon of 7 February, banks on the deal unveiled a final offer price of EUR 11.50 a share, around the middle of its initial range and an over 30% discount to its main listed peer Amadeus [BME:AMS].

HBX is a Europe-centric business with little exposure to the US, an ECM investor said. This is an attractive narrative, he said, adding that Stada, the Bain Capital and Cinven-owned German pharmaceutical company, also fits into this picture.

“People are very focused on good defensive, local stories, like HBX,” he said. “Stada is well-liked and very Europe focused.”

Trump has rapidly disrupted the world order, with last week’s tariffs and concessions sending stock markets into the red. While threats against Mexico and Canada were paused after border security commitments, new tariffs on China took effect, prompting swift retaliation.

The protectionist policies didn’t stop there. The 47th president has also vowed to impose future tariffs on the EU and is flagging 25% duties on all steel and aluminum imports, heightening global trade war fears.

All sources speaking to ECM Pulse this week acknowledged that Trump had shocked markets with the speed and ferociousness of his trade restrictions.

“The implementation caught many by surprise, it wasn’t expected to happen so soon,” said a European ECM banker. “We remain hopeful that a full-blown trade war can be avoided, but the uncertainty will likely drive investors toward defensive positions.”

Luckily though, for some equity bankers, investment flows appear to show that several buy-side players see certain European stocks as a perfect place to batten down the hatches, as the trade war winds blow.

The Stoxx 600 is up by around 6.67% year-to-date, outperforming all three of the major US benchmarks.

This flow has also been present in the capital markets, with ECM bankers noting an increased US presence in accelerated bookbuilds as well as in IPO books and in deal pre-marketing.

“The market is very constructive and there is a huge rotation from the US to Europe going on,” said an ECM banker, citing falling Europe’s interest rates, defensive stocks and stellar corporate earnings as drivers for investment flows in stocks listed across the continent.

As of February 7, two of the top three largest global block trades have been in London-listed stocks, Haleon [LON:HLN] and British America Tobacco [LON:BATS], with sources at the time noting a large US presence in deal books.

“Nobody has cared about Europe for 10 years or so and now we see a host of US longs taking big positions in European stocks, which many see as undervalued,” said a second banker. Valuations remain good in Europe, this banker said, adding that tariffs and the volatility caused by artificial intelligence (AI) upstart DeepSeek have been particularly noteworthy in the US.

However, not all European businesses seeking to list will be as fortunate. “This volatility is very painful for investors and there are plenty of themes you don’t want to be invested in,” the investor added. “Anything with a global macro focus is something you want to avoid.”

Venture Global [NYSE:VG] is an example of a name that has been by the trade war. “That’s exactly the sort of business you don’t want to buy now,” the investor said.

US liquid natural gas (LNG) producer Venture Global is trading 21% below its IPO price. It has fallen by around 24% since close on 3 February, in response to China’s retaliatory 15% tariffs on US LNG imports, announced 4 February, in response to Trump’s additional 10% tariff on Chinese goods the day before.

Venture Global has agreements to sell 9.5m tons of LNG annually to Chinese buyers.

Equity bankers tap huge well of oil and gas fees, trade war threatens momentum | ION Analytics | Mergermarket

This threat of increasing trade wars is of particular concern to European bankers, especially given Trump’s threats to target the EU.

“We hope a deal between Trump and the EU can be reached in Europe,” said the Benelux banker but noted that investors were already beginning to price in European tariffs.

The one beneficiary in this environment might be the UK, noted the second banker adding that the country had largely stayed away from the US president’s focus on punishing trade rivals.

“We have plenty of potential deals to do in the UK, so activity there could still pick up, even if Trump introduces tariffs on Europe,” this banker said.

Investors will be keen to stick to fundamentals and, should volatility worsen, issuers will have to make deals too good for investors to refuse.

“Having a European-centric businesses certainly helps but, in this market, the most important thing investors want are sensible companies at a sensible price,” added the same banker. “American investors do see the value in Europe but deals also need to be priced appropriately.”