Ant IPO suspension gives investors reality check

Ant IPO suspended: The $37bn dual listing of Alibaba Group’s spin-off Ant Group was called off overnight, 48 hours before China’s largest financial technology company was due to make simultaneous stock market debuts Shanghai and Hong Kong.

The much-anticipated Ant IPO was set to overtake last December’s $26bn listing by Saudi Aramco as the world’s largest initial public offering, but last night the Shanghai stock exchange put proceedings on ice after Ant’s – and Alibaba’s – billionaire founder Jack Ma was called in by Chinese regulators for “supervisory interviews”.

The authorities claimed the decision to suspend the Ant IPO was driven by the belief that recent changes in the fintech regulatory environment meant that the company ‘may not meet listing qualifications or disclosure requirements’ on China’s STAR market. There is, however, a strong suspicion abroad that Ma’s recent criticism of China’s state-owned banks at a financial summit in Shanghai, when he accused them of having a ‘pawnshop mentality’, had more than a little to do with it.

Either way, the regulators’ decision to call Ma in and the subsequent suspension of the Ant IPO has made it very clear that Beijing’s enthusiasm for the free market has its limits. This latest drama has, ironically, unfolded in the same week as the introduction of the new Qualified Foreign Institutional Investor (QFII)  regulations that had been designed to give overseas investors more flexibility in the management of their investments in China’s capital markets.

With factory output also approaching a ten-year high, what could have been a red-letter week for those markets has turned out to be something of a disappointment. On the Hang Seng, shares of Alibaba – which relies on Ant’s payments infrastructure for its e-commerce operations – fell by over 9% as investors took a reality check and reflected on a timely reminder as to who is still really the boss on the Hong Kong and Shanghai markets.