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Instant View: China halts Ant Group's mega IPO

SINGAPORE (Reuters) - China suspended Ant Group’s $37 billion stock market listing on Tuesday, thwarting the world’s largest IPO with just days to go, in a dramatic move that left investors and bankers scrambling for answers.

FILE PHOTO: A logo of Ant Group is pictured at the headquarters of the company, an affiliate of Alibaba, in Hangzhou, Zhejiang province, China October 29, 2020. REUTERS/Aly Song/File Photo

Following are instant reactions from investors and analysts:

FRASER HOWIE, INDEPENDENT COMMENTATOR AND AUTHOR OF SEVERAL BOOKS ABOUT CHINA’S FINANCIAL SYSTEM:

“It is embarrassing for Ant Group, it also looks bad for sponsors and the exchange and regulators. The SSE (Shanghai Stock Exchange) says the suspension is based on changes of structure which breach the listing disclosure rules. How could this happen? No excuse at all for such failings around disclosure.

Or perhaps this is really politics at play, the state is reining in the private sector in the most embarrassing of ways but that I think is somewhat foolish an approach. Ant Group should be regulated as a financial company but China has made a major push to open its markets and welcome foreigners and then this happens. The world’s largest IPO, China’s most famous tech group and this mess. Everyone looks foolish.”

DAVE WANG, PORTFOLIO MANAGER, NUVEST CAPITAL, SINGAPORE:

“For now, markets will sell off Alibaba and likely Tencent as well as other relevant exposures like HSCEI Tech due to anticipation of Ant’s listing. Chinese banks may be a beneficiary and given they are underowned, we could see a rally.

More details will come and if this is an isolated incident to Ant, then the new economy stocks that have done well so far should be fine, which is the base case now. If not, markets may start to price in uncertainty on tighter regulations on private enterprises and we could see a significant pull back on Chinese growth stocks.”

JUSTIN TANG, HEAD OF ASIAN RESEARCH AT UNITED FIRST PARTNERS, SINGAPORE:

It’s quite clear that the magnitude of the oversubscriptions and the influence of Alibaba have become a source of concern for the regulators.”

HAO HONG, HEAD OF RESEARCH AT BOCOM INTERNATIONAL:

“This came as a surprise to just about everyone. In the Hong Kong official announcement Ant says it will return money. But the postponement of the listings mean less draw down on near term market liquidity and as such may not be a market negative from a trading perspective.”

FRANCIS LUN, CEO OF GEO SECURITIES :

“The Communist Party has shown the tycoons who’s boss. Jack Ma might be the richest man in the world but that doesn’t mean a thing. This has gone from the deal of the century to the shock of the century. Jack Ma got ahead of himself by criticising the commercial banks and the regulatory regime.”

ZHONG DAQI, FOUNDING PARTNER OF GUANGZHOU ZEYUAN INVESTMENT MANAGEMENT CO:

“It’s the right move to regulate what’s essentially a financial institution as their peers. And it’s wrong not to do that in the past, and the mistake is being corrected. It will have a negative impact on pricing.”

ALEX SIRAKOV, SENIOR ASSOCIATE AT ADVISORY FIRM KAPRONASIA:

“Ant may be just falling victim to their own size and success. I am more inclined to think of this as a political message reminding everyone this is a highly regulated economy.”

WANG JIYUE, EX-SENIOR INVESTMENT BANKER AND A COLUMNIST FOR THE MAINLAND CAPITAL MARKET:

“The suspension does not necessarily mean cancellation, so the final listing is just a matter of time. But with the online micro-lending rules freshly rolled out, Ant does have the responsibility to spell out the impact to its business. In front of rules, Ant should not get special treatment and it’s how the registration-base IPO system works.”

VARUN MITTAL, SINGAPORE-BASED HEAD OF EMERGING MARKETS FINTECH BUSINESS AT EY:

“As regulated financial services players like banks and insurers converge in offering to technology firms, regulators are faced with three options - regulate technology firms like incumbents, modify existing laws to handle new models and providers, and lastly create a new set of laws to manage oversight of technology firms.

Each country is adopting a diverse mix from the above three options to achieve the end objectives of stability of financial services ecosystem, consumer protection and preserving market competition.”

PHILIPPE ESPINASSE, CAPITAL MARKETS CONSULTANT AND FORMER INVESTMENT BANKER:

“Either this is something that requires short-term clarification through an announcement and/or supplemental prospectus, and investors could be asked to reconfirm their orders, generally not many do so, when something like this happens. Or the deal will simply be pulled and delayed for a period time, pending resolution of the issues.

“This a significant blow or development for both for the company and other potential fintech issuers in Hong Kong and mainland China.”

Reporting by Scott Murdoch, Samuel Shen, Anshuman Daga, Yingzhi Yang, Cheng Leng, Kane Wu and Tom Westbrook; Compiled by Anshuman Daga; Editing by Edward Tobin and Carmel Crimmins

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