The company said yesterday it was not proceeding with the flotation, citing "adverse market conditions" and "significant market volatility", without giving details about the demand for the offering.

Demand was more tepid than expected, after a slide in regional stock markets before the institutional book was closed on Thursday in New York, according to people familiar with the deal.

In addition, the South Korean won has been surging on the back of a weakening Japanese yen, creating concern over the competitiveness of South Korea's exports.

Mando China had offered to sell 243.4 million shares, of which 75 per cent were old shares and the rest new.

The firm was scheduled to price its shares yesterday and to start trading next Friday.

The falls in regional markets on Thursday were triggered by a sharp drop in Japanese stocks. Tokyo's Nikkei 225-Index dived 7.3 per cent - its largest one-day fall in two years in percentage terms.

The Japanese market closed 0.89 per cent firmer yesterday, but only after undergoing wild swings.

"Market volatility in Japan is such that it remains to be seen if this will be a lasting correction or just a natural pullback after many days of strong rises," said Trevor Greetham, a director at Fidelity.

Meanwhile, the Hang Seng Index fell 0.23 per cent yesterday, after dropping 2.5 per cent on Thursday, amid concerns about slowing growth on the mainland, where manufacturing activity shrank for the first time in seven months on a drop in new orders.

"The cooling manufacturing activity in May reflected slower domestic demand and ongoing external headwinds," said Qu Hongbin, a China economist at HSBC.

"A sequential slowdown is likely in the middle of the second quarter, creating downside risks for the mainland's fragile growth recovery."