Ma gives STAR vote of confidence with sale of the century

Beijing’s plans to establish the Shanghai-based STAR market and Hong Kong’s Hang Seng index as competitive alternatives to the NASDAQ for Chinese companies looking to raise international finance received a boost today when Alibaba founder Jack Ma confirmed that he had filed applications to put at least 10% of his Ant Group up for sale on both exchanges simultaneously. The partial flotation of  China’s largest digital payments provider and digital finance platform is expected to be the largest fundraising operation in the history of global finance with interest in the dual listing widely expected to be even larger than the $29.4bn that Saudi Aramco elicited last December.
Set up last year with the blessing of President Xi Jinping to be China’s equivalent to NASDAQ, the STAR market (officially known as the Shanghai Stock Exchange Science and Technology Innovation Board) originally attracted companies with a domestic orientation such as amec (chipmaking tools), Montage Technology (semiconductors) and Kingsoft (office software). That all changed last month with the first genuinely international listing in the form of Semiconductor Manufacturing International Corporation (SMIC), whose operational network stretches throughout Europe and the US as well as Taiwan and mainland China. The listing raised $6.5bn and in the same month STAR launched an index of its 50 biggest companies.
Although Beijing will see Ma’s decision to list the Ant group in both Shanghai and Hong Kong as something of a coup in the context of the ongoing US-China trade war, such dual listings were relatively common before the 2008 financial crisis and shares of a total of 125 Chinese companies are already traded on both the STAR and the Hang Seng. The Tsingtao Brewery started the trend back in 1993 and has used its access to capital to transform what was a state-owned factory in Shandong into one of the largest breweries in the Asia Pacific with a market cap of more than $
It now remains to be seen if the recent easing of listing regulations will enable a new generation of Chinese companies to emulate the brewery’s success. “The Chinese capital markets were always going to open up in the long term, so a Nasdaq-style exchange on the mainland was bound to follow at some point,” says China Renaissance MD Andy Maynard. “The size and complexity of China’s new economy play will always make China attractive globally.” Exactly how comfortable the investment community will feel with the near certainty that Beijing will not let any of its commercial flagships fail is, of course, now the billion-dollar question.