13 ms·

Shanghai stock exchange suspends Ant Group's A-share IPO

238 points by ytch 6y ago

JMY1 6y ago
Jack Ma had a speech against Chinese financial regulation on last weekend. I guess this must be the main reason ...
- almost_usual 6y ago
  He probably didn’t do himself any favors speaking out about it ahead of time..
  - deleted 6y ago
    [deleted]
conistonwater 6y ago
> Ant Group has recently reported to China’s securities regulator about the significantly changes in regulatory environment, the exchange said, and this major development might make Ant Group fall short of the listing requirement regarding information disclosure What does this mean? Does this sentence even say anything?
- netheril96 6y ago
  China just put out a new set of regulation that will severely dampen the leverage available to Ant, and thus dampen their revenue and profit significantly. That will in turn lead to significant downvaluing of its stocks. So, the next step for the Chinese regulators is to suspend the whole thing for the dust to settle.
  - garmaine 6y ago
    Or the right bribes to be made.
    - isatty 6y ago
      Somehow I don’t see this going away quietly with bribes. ANT IPO has lots and lots of eyes on it.
chenzhekl 6y ago
This link provides more information: https://www.reuters.com/article/us-ant-group-ipo/ant-groups-37-billion-listing-suspended-in-shanghai-and-hong-kong-idUSKBN27J1OS https://www.reuters.com/article/us-ant-group-ipo/ant-groups-...
balola 6y ago
It's an unusual move, but the whole IPO is odd. IPO at its relative late stage with a gigantic valuation, leaving little for retail investors to gain from. And its whole IPO process is preferential treatment at its finest, almost looked like Jack Ma can do whatever he wanted. Ant and Ma's condescending posture did draw a fairly big backlash, it's certain pratices border on non-compliance, and Ma's beneficiaries are mostly from the last leadership, these probably helped put a brake on it.
- MattGaiser 6y ago
  > IPO at its relative late stage with a gigantic valuation, leaving little for retail investors to gain from. Isn't this just following a trend for larger and later IPOs? https://www.vox.com/2014/9/11/6134529/a-new-york-stock-exchange-exec-explains-why-ipos-are-becoming-less https://www.vox.com/2014/9/11/6134529/a-new-york-stock-excha...
  - balola 6y ago
    Americans markets have been booming for the past 10 years, relatively robust and "policed", it also has something to do with the dollar dominance, so they kind of can take these bets? But it's not the case for Chinese domestic markets.
  - conjectures 6y ago
    > The IPO was a sensational draw for China’s retail investors who bid a record $3 trillion, equivalent to the entire annual economic output, for shares in the fintech giant. :o that sounds quite frothy.
    - gruez 6y ago
      Yeah, for comparison Apple's valuation is 1.88T, compared to US's GDP of 20.8T.
- est 6y ago
  > It's an unusual move, but the whole IPO is odd. In the IPO files Ant Group declared itself as a "tech company" under supervision of Ministry of Cyberspace. LOL
ibic 6y ago
HKEX followed suit also.
dtwest 6y ago
Isn't China shooting themselves in the foot here? I don't know the details of the situation so I'd be happy to hear from someone who knows more, but this deal could've been a huge win for Chinese financial markets. Down the road, unexpected government action like this could hurt investor confidence and depress the amount of money Chinese companies will be able to raise from foreign investors.
- balola 6y ago
  Its gigantic valuation most likely will face a harsh test, one that the fragile domestic market can hardly afford, a risk that worries the administration who has been desperately propping it up that also hopes it can fund China's tech self-reliance. Such listings didn't bode well in the past, with SMIC being the lastest example. At its core, Ant is more of a lending company, re-distributing money it got from banks at much higher interest rates (typically 15%, some banks offer personal credit loans at around 4%) and leverage. Tho it insists on it's high-tech, in order to boost valuation and avoid financial regulation, but how many more debt can the population pile on itself? Sidenote: Its business model profits from people that traditional banks snubed, mostly from lower social classes.
  - fakedang 6y ago
    In India, we called them moneylenders and it carries a jail term to engage in such activities. Good to see Wall Street and the West lap up such usurious companies.
- Aperocky 6y ago
  You probably think US trying to regulate big tech is also self shooting? It's not, a healthy market need to curtail monopolies. Granted, it's no longer early 20th century and you can't just break them up like Standard Oil because that doesn't make any sense, but regulations are sorely needed across the pond.
  - dtwest 6y ago
    No, that's not what I think. In Ant's case, it is the unexpected nature of the action and lack of transparency that I see as damaging. Not necessarily the action itself. I'm still trying to learn what is going on and why, I haven't made a judgement on the action itself.
whatok 6y ago
There's a regulatory draft that requires small business lenders like Ant to warehouse 30% of the loans they originate vs the 2% that they currently have on balance sheet. This draft was disclosed after regulators met with Jack Ma and other Ant executives. No clue why this was only done now but this significantly changes valuations.
- thedudeabides5 6y ago
  Thanks, first I’m seeing anyone report this as the reason. The 2% they were operating under was a joke (less than 1/3rd Lehman’s capitalization), 30% on the other hand, seems outright punitive if true. Timing is weird too.
  - whatok 6y ago
    The timing makes sense if it is in response to his recent remarks but the regulation is extremely punitive vs potential outcome if this IPO gets botched.
  - netheril96 6y ago
    I don’t think it is punitive. Ant primarily lends to individuals without any collateral. Those are inherently high risk debts and thus needs more safeguards.
  - 112012123 6y ago
    This is a little different than what Lehman got in trouble for in the US. During the financial crisis, the core issue is that banks were making loans off their own balance sheet with reserves too small to cover the losses that eventually occurred. In other words, when borrowers defaulted the bank itself lost money. This made them insolvent and caused the whole collapse. In the case of Ant on the other hand, they essentially function as a lead generation platform for banks - currently 98% of "their loans" aren't really theirs at all, but rather are funded by their partner banks; if the loan defaults, it's the partner bank's problem, not Ant's. The reason this change is such a big deal is that forcing Ant to fund 30% of its own loans will require raising an absolutely enormous amount of fairly expensive capital, driving up costs and significantly decreasing the value of the company.
jonathannat 6y ago
A couple of guesses here a. Ant group is partially owned by a large group of elite foreign investors https://www.wsj.com/articles/ant-ipo-promises-8-billion-gain-for-elite-group-of-foreign-investors-11603970412 https://www.wsj.com/articles/ant-ipo-promises-8-billion-gain..., who will gain hugely from this IPO. The Chinese government doesn't want such a huge financial entity owned by foreign owners (even though they have claimed they are allowing more foreign entries in financial sectors). Also, China is suffering from dollar shortage/flight (foreign manufacturing moving out, foreign retailers moving in), and this IPO could exacerbate it b. Jack Ma recently criticized the Chinese banks https://www.pymnts.com/news/ipo/2020/jack-ma-summoned-for-questioning-about-ant-ipo/ https://www.pymnts.com/news/ipo/2020/jack-ma-summoned-for-qu.... This is a big no no right now, especially since Xi's dictatorship is wobbly. Also this is what happens when you upset the world's largest mafia - Chinese government and Chinese state owned companies. Just look at what happened to Australia https://www.abc.net.au/news/2020-11-03/china-broadens-trade-war-against-australian-imports/12841142 https://www.abc.net.au/news/2020-11-03/china-broadens-trade-..., South Korea https://www.vox.com/latest-news/2017/3/3/14795636/china-south-korea-pop-culture-kpop-attacks-thaad https://www.vox.com/latest-news/2017/3/3/14795636/china-sout... US https://www.defensenews.com/global/asia-pacific/2020/10/26/china-to-sanction-boeing-lockheed-and-raytheon-over-taiwan-arms-sales/ https://www.defensenews.com/global/asia-pacific/2020/10/26/c... and Japan https://www.nytimes.com/2010/09/23/business/global/23rare.html https://www.nytimes.com/2010/09/23/business/global/23rare.ht... c. There is probably a lot of financial misreporting within Ant Group, as it is pretty commonplace for Chinese public companies - check out recently delisted Chinese companies in US stock exchanges. If this IPO is allowed to expand, that's game over for shanghai stock exchange sooner than later. (if you ask me, why would anyone invest in any mafia pyramid scheme with no guarantee you'll get your money out...)
- Aperocky 6y ago
  Ant is definitely not a pyramid scheme, if you've ever been to China you'd know. But b. is very credible. Jack has been criticized by state media as he piled negative comments to the regulators and traditional lenders - and frankly the regulators were right. Ant essentially needs no deposit to lend, relying on big data and not any traditional financial safety instruments. It's been overlooked for a while but when you get the big benefit of living outside of regulations you shut up and take what you get, and not making a public fuss about how 'every bank is stupid for following regulations'.
kgilpin 6y ago
How can Jack Ma belong to the Chinese communist party, and also own a huge company? Does communism not mean what it used to mean any more?
- nsriv 6y ago
  The Chinese Communist Party has been transitioning to the idea of state capitalism for decades now.
- baybal2 6y ago
  Not since the three represents.
- redis_mlc 6y ago
  > How can Jack Ma belong to the Chinese communist party, and also own a huge company? Does communism not mean what it used to mean any more? - to own a huge company in China, you would have to be a member of the CCP. Otherwise it would be stripped from you and you would be jailed. - as of 2019, companies over 50 employees have a CCP cell in their office. The CCP is now going after even smaller companies in 2020. - communism is totalitarianism. That means the society is strictly controlled top-down, from Dragon Families/Xi to the lowest peasant. The families pillage China on a national scale (Three Gorges power generation revenue, etc.), while the CCP has ultimate control of literally everything else. - China has had tremendous growth, funded by the West, but aggressively-managed by local officials with KPIs, etc. - the CCP is modelled on the Soviet Union, but on steroids - It's reported that the top 100 CCP officials have personal wealth of around $2 billion each.
nitrobeast 6y ago
There seem to be at least two large factions in CCP when dealing with Ant Financial. In exaggerated terms: 1. The statists who want strict control over financial giants like Ant Financial. They created the new regulations. 2. The neo liberals who are much friendlier to capitalists. They helped rush through the IPO. My guess is that neo liberals got wind of the impending regulations, which is the reason for the rushed IPO schedule and Jack Ma’s criticism of Chinese and international banking systems.
ngcc_hk 6y ago
Not just a share but also h share where the world including USA should concern about, as your money might be involved.

238 points by ytch 6y ago

JMY1 6y ago

Jack Ma had a speech against Chinese financial regulation on last weekend. I guess this must be the main reason ...

almost_usual 6y ago
He probably didn’t do himself any favors speaking out about it ahead of time..
- deleted 6y ago
  [deleted]

conistonwater 6y ago

> Ant Group has recently reported to China’s securities regulator about the significantly changes in regulatory environment, the exchange said, and this major development might make Ant Group fall short of the listing requirement regarding information disclosure What does this mean? Does this sentence even say anything?

netheril96 6y ago
China just put out a new set of regulation that will severely dampen the leverage available to Ant, and thus dampen their revenue and profit significantly. That will in turn lead to significant downvaluing of its stocks. So, the next step for the Chinese regulators is to suspend the whole thing for the dust to settle.
- garmaine 6y ago
  Or the right bribes to be made.
  - isatty 6y ago
    Somehow I don’t see this going away quietly with bribes. ANT IPO has lots and lots of eyes on it.

chenzhekl 6y ago

This link provides more information: https://www.reuters.com/article/us-ant-group-ipo/ant-groups-37-billion-listing-suspended-in-shanghai-and-hong-kong-idUSKBN27J1OS https://www.reuters.com/article/us-ant-group-ipo/ant-groups-...

balola 6y ago

It's an unusual move, but the whole IPO is odd. IPO at its relative late stage with a gigantic valuation, leaving little for retail investors to gain from. And its whole IPO process is preferential treatment at its finest, almost looked like Jack Ma can do whatever he wanted. Ant and Ma's condescending posture did draw a fairly big backlash, it's certain pratices border on non-compliance, and Ma's beneficiaries are mostly from the last leadership, these probably helped put a brake on it.

MattGaiser 6y ago
> IPO at its relative late stage with a gigantic valuation, leaving little for retail investors to gain from. Isn't this just following a trend for larger and later IPOs? https://www.vox.com/2014/9/11/6134529/a-new-york-stock-exchange-exec-explains-why-ipos-are-becoming-less https://www.vox.com/2014/9/11/6134529/a-new-york-stock-excha...
- balola 6y ago
  Americans markets have been booming for the past 10 years, relatively robust and "policed", it also has something to do with the dollar dominance, so they kind of can take these bets? But it's not the case for Chinese domestic markets.
- conjectures 6y ago
  > The IPO was a sensational draw for China’s retail investors who bid a record $3 trillion, equivalent to the entire annual economic output, for shares in the fintech giant. :o that sounds quite frothy.
  - gruez 6y ago
    Yeah, for comparison Apple's valuation is 1.88T, compared to US's GDP of 20.8T.
est 6y ago
> It's an unusual move, but the whole IPO is odd. In the IPO files Ant Group declared itself as a "tech company" under supervision of Ministry of Cyberspace. LOL

ibic 6y ago

HKEX followed suit also.

dtwest 6y ago

Isn't China shooting themselves in the foot here? I don't know the details of the situation so I'd be happy to hear from someone who knows more, but this deal could've been a huge win for Chinese financial markets. Down the road, unexpected government action like this could hurt investor confidence and depress the amount of money Chinese companies will be able to raise from foreign investors.

balola 6y ago
Its gigantic valuation most likely will face a harsh test, one that the fragile domestic market can hardly afford, a risk that worries the administration who has been desperately propping it up that also hopes it can fund China's tech self-reliance. Such listings didn't bode well in the past, with SMIC being the lastest example. At its core, Ant is more of a lending company, re-distributing money it got from banks at much higher interest rates (typically 15%, some banks offer personal credit loans at around 4%) and leverage. Tho it insists on it's high-tech, in order to boost valuation and avoid financial regulation, but how many more debt can the population pile on itself? Sidenote: Its business model profits from people that traditional banks snubed, mostly from lower social classes.
- fakedang 6y ago
  In India, we called them moneylenders and it carries a jail term to engage in such activities. Good to see Wall Street and the West lap up such usurious companies.
Aperocky 6y ago
You probably think US trying to regulate big tech is also self shooting? It's not, a healthy market need to curtail monopolies. Granted, it's no longer early 20th century and you can't just break them up like Standard Oil because that doesn't make any sense, but regulations are sorely needed across the pond.
- dtwest 6y ago
  No, that's not what I think. In Ant's case, it is the unexpected nature of the action and lack of transparency that I see as damaging. Not necessarily the action itself. I'm still trying to learn what is going on and why, I haven't made a judgement on the action itself.

whatok 6y ago

There's a regulatory draft that requires small business lenders like Ant to warehouse 30% of the loans they originate vs the 2% that they currently have on balance sheet. This draft was disclosed after regulators met with Jack Ma and other Ant executives. No clue why this was only done now but this significantly changes valuations.

thedudeabides5 6y ago
Thanks, first I’m seeing anyone report this as the reason. The 2% they were operating under was a joke (less than 1/3rd Lehman’s capitalization), 30% on the other hand, seems outright punitive if true. Timing is weird too.
- whatok 6y ago
  The timing makes sense if it is in response to his recent remarks but the regulation is extremely punitive vs potential outcome if this IPO gets botched.
- netheril96 6y ago
  I don’t think it is punitive. Ant primarily lends to individuals without any collateral. Those are inherently high risk debts and thus needs more safeguards.
- 112012123 6y ago
  This is a little different than what Lehman got in trouble for in the US. During the financial crisis, the core issue is that banks were making loans off their own balance sheet with reserves too small to cover the losses that eventually occurred. In other words, when borrowers defaulted the bank itself lost money. This made them insolvent and caused the whole collapse. In the case of Ant on the other hand, they essentially function as a lead generation platform for banks - currently 98% of "their loans" aren't really theirs at all, but rather are funded by their partner banks; if the loan defaults, it's the partner bank's problem, not Ant's. The reason this change is such a big deal is that forcing Ant to fund 30% of its own loans will require raising an absolutely enormous amount of fairly expensive capital, driving up costs and significantly decreasing the value of the company.

jonathannat 6y ago

A couple of guesses here a. Ant group is partially owned by a large group of elite foreign investors https://www.wsj.com/articles/ant-ipo-promises-8-billion-gain-for-elite-group-of-foreign-investors-11603970412 https://www.wsj.com/articles/ant-ipo-promises-8-billion-gain..., who will gain hugely from this IPO. The Chinese government doesn't want such a huge financial entity owned by foreign owners (even though they have claimed they are allowing more foreign entries in financial sectors). Also, China is suffering from dollar shortage/flight (foreign manufacturing moving out, foreign retailers moving in), and this IPO could exacerbate it b. Jack Ma recently criticized the Chinese banks https://www.pymnts.com/news/ipo/2020/jack-ma-summoned-for-questioning-about-ant-ipo/ https://www.pymnts.com/news/ipo/2020/jack-ma-summoned-for-qu.... This is a big no no right now, especially since Xi's dictatorship is wobbly. Also this is what happens when you upset the world's largest mafia - Chinese government and Chinese state owned companies. Just look at what happened to Australia https://www.abc.net.au/news/2020-11-03/china-broadens-trade-war-against-australian-imports/12841142 https://www.abc.net.au/news/2020-11-03/china-broadens-trade-..., South Korea https://www.vox.com/latest-news/2017/3/3/14795636/china-south-korea-pop-culture-kpop-attacks-thaad https://www.vox.com/latest-news/2017/3/3/14795636/china-sout... US https://www.defensenews.com/global/asia-pacific/2020/10/26/china-to-sanction-boeing-lockheed-and-raytheon-over-taiwan-arms-sales/ https://www.defensenews.com/global/asia-pacific/2020/10/26/c... and Japan https://www.nytimes.com/2010/09/23/business/global/23rare.html https://www.nytimes.com/2010/09/23/business/global/23rare.ht... c. There is probably a lot of financial misreporting within Ant Group, as it is pretty commonplace for Chinese public companies - check out recently delisted Chinese companies in US stock exchanges. If this IPO is allowed to expand, that's game over for shanghai stock exchange sooner than later. (if you ask me, why would anyone invest in any mafia pyramid scheme with no guarantee you'll get your money out...)

Aperocky 6y ago
Ant is definitely not a pyramid scheme, if you've ever been to China you'd know. But b. is very credible. Jack has been criticized by state media as he piled negative comments to the regulators and traditional lenders - and frankly the regulators were right. Ant essentially needs no deposit to lend, relying on big data and not any traditional financial safety instruments. It's been overlooked for a while but when you get the big benefit of living outside of regulations you shut up and take what you get, and not making a public fuss about how 'every bank is stupid for following regulations'.

kgilpin 6y ago

How can Jack Ma belong to the Chinese communist party, and also own a huge company? Does communism not mean what it used to mean any more?

nsriv 6y ago
The Chinese Communist Party has been transitioning to the idea of state capitalism for decades now.
baybal2 6y ago
Not since the three represents.
redis_mlc 6y ago
> How can Jack Ma belong to the Chinese communist party, and also own a huge company? Does communism not mean what it used to mean any more? - to own a huge company in China, you would have to be a member of the CCP. Otherwise it would be stripped from you and you would be jailed. - as of 2019, companies over 50 employees have a CCP cell in their office. The CCP is now going after even smaller companies in 2020. - communism is totalitarianism. That means the society is strictly controlled top-down, from Dragon Families/Xi to the lowest peasant. The families pillage China on a national scale (Three Gorges power generation revenue, etc.), while the CCP has ultimate control of literally everything else. - China has had tremendous growth, funded by the West, but aggressively-managed by local officials with KPIs, etc. - the CCP is modelled on the Soviet Union, but on steroids - It's reported that the top 100 CCP officials have personal wealth of around $2 billion each.

nitrobeast 6y ago

There seem to be at least two large factions in CCP when dealing with Ant Financial. In exaggerated terms: 1. The statists who want strict control over financial giants like Ant Financial. They created the new regulations. 2. The neo liberals who are much friendlier to capitalists. They helped rush through the IPO. My guess is that neo liberals got wind of the impending regulations, which is the reason for the rushed IPO schedule and Jack Ma’s criticism of Chinese and international banking systems.

ngcc_hk 6y ago

Not just a share but also h share where the world including USA should concern about, as your money might be involved.