[ad_1]
Wed, Nov 04, 2020 – 5:50 am
Singapore
IN a heartwarming decision, the Shanghai Stock Exchange (SSE) suspended Ant Group’s listing, just two days before the world’s largest IPO took place in the city and Hong Kong.
The cancellation of the $ 34 billion double listing comes after Ant Group co-founder Jack Ma and two top executives were called to a meeting with regulators on Monday, according to reports.
In a statement posted on SSE’s website, the exchange said: “Due to the reported material issues, your company may no longer meet the conditions for offering and listing, or the requirements for disclosure of information.”
Market watchers expressed surprise, saying that canceling an initial public offering at such a late stage is highly unusual.
“I don’t recall a listing being delayed this late in the IPO process. I don’t think investors are panicking just yet, but it’s very unusual,” said Jasper Lawler, head of research at forex broker London Capital Group. Business times.
He said authorities could be “very cautious” as it is supposed to be the largest initial public offering in history, although he admits the wording is “a bit worrisome.”
“When you hear ‘major issues,’ the reason for the delay is definitely not a typo. Ant is spun off from Alibaba and there were big questions about its offshore structure when it went public in the United States,” Lawler said.
Stephen Innes, AxiCorp’s chief global markets strategist, said the move “feels like a regulatory crackdown” from China, in a bid to prevent the Chinese fintech titan from gaining control of financial networks in the country.
He added that the bigger the “monopoly-type tech companies,” the more financial control they get over the markets overall, given the way markets are moving online.
A Reuters report cited two unidentified sources as saying that Ant’s trio had been informed that the company, particularly its consumer loan business, will face stricter scrutiny on matters including capital adequacy and indices. of leverage.
This comes as some regulators were “surprised” by Ant’s business and financial figures, including the scale and profitability of its lending business, the details of which were first disclosed in its IPO prospectus in late August, Reuters reported that said the first source.
But the implications of the suspension go beyond the delay in the group’s listing. Edward Moya, senior market analyst at Oanda in New York, said this has also changed Ant Group’s business outlook.
As the IPO was expected to be one of the key drivers for the company, the current state of affairs has dampened investor confidence in its profitability and growth, which “will paralyze the outlook for the next two years,” he added. .
On a larger scale, uncertainty about the Chinese market may also arise.
Having successfully contained the spread of the coronavirus in the country, China’s economy has since seen strong signs of recovery.
But the suspension of the Ant Group IPO will be a “very bearish driver in one of the bright spots” of the global economy, Moya said. He added: “It’s very poor for the IPO stage, for Asia at the moment … I think everyone associated this with one of the very positive dominoes in the bull case for global activities.”
In the event that Ant Group gets the green light to go ahead with its IPO, Terence Wong, CEO of Azure Capital, believes the initial market euphoria may be tempered by this incident.
Wong believes this may be a form of the government’s rejection of the outspoken Mr. Ma, who is “very sincere” with his comments.
After all, Ma had been critical of local and global regulators for stifling innovation, according to a recent Bloomberg report, which said: “Good innovation is not afraid of regulation, but outdated regulation.
Mr Wong said: “You would think that in the national interest, they would like to support rather than (suspend the IPO). But I guess they are trying to send a signal, not just to the rich, but to the ultra-rich in China, that they put the national interest before anything else. “
Ant has been hit by a wave of new rules in recent months as China tightens control over online lenders and companies operating in multiple lines of financial business. The measures have included capital and license requirements, a cap on loan rates, and limits on Ant’s use of asset-backed securities to finance loans.
On Monday, the banking regulator published draft rules that would force Ant and other online lending platform operators to finance more of the loans they offer together with banks.
Additional reporting by Uma Devi
READ MORE: Hong Kong’s financial system hit by big IPO deals
[ad_2]
