Daily Management Review

Chinese Regulators Suspend Ant’s Record IPO Shocking Millions Of Retail Investors


Chinese Regulators Suspend Ant’s Record IPO Shocking Millions Of Retail Investors
Chinese share market regulators brought an abrupt stop to Ant group’s stock market debut, which would have been the largest ever in the world, which stunned the small retail and mom-and-pop investors who made investments in the company worth a record $3 trillion in which is equivalent to the annual economic output of the United Kingdom.
The $37 billion listing of the Chinese fintech giant was blocked by China swhich prevented completion of the company’s debut in Hong Kong and Shanghai that were scheduled for Thursday. The decision delivered a severe blow to the company founded by billionaire and Alibaba co-founder Jack Ma.
According to reports, this decision was taken by the Chinese regulators after a meeting with Ant executives, including Ma, in which the regulators told the company executives that there would be greater scrutiny for the lucrative online lending business of the company.
Thousands of retail investors in the two share markets, which ranged from taxi drivers to students and young professionals, made use of their savings as well as heavy borrowings from banks and brokerages to invest in what many described as a once-in-a-lifetime opportunity for investment.
"I feel like I made a very wrong decision," said 21-year-old Hong Kong resident and Cambridge student, Vincent Tse, who applied for 2,000 shares worth around HK$160,000 ($20,640) which he earned doing a part-time job according to one of the media reports.
"This situation really reveals a deep problem in the Chinese market and shows a lack of experience in holding such a large IPO," Tse said, while also adding that he would no more invest the money in Ant but in companies listed in stock markets in the United States, Japan and the European markets.
One of the key factors that would impact Ant's future development is the changing business environment, according to investors in China. Many some however said that there would be some investors who would be keen to invest.
a massive amount of margin lending by financial institutions in mainland China and in Hong Kong supported the unprecedented retail frenzy for Ant's shares. Billions of dollars were lent by brokerages in Hong Kong.
According to reports quoting sources in the banking industry, as much as 30 times leverage at interest rates of between 0.4 per cent and 0.5 per cent for a period of around 10 days was offered by some banks in Hong Kong.
Over the next couple of days the application money for the Hong Kong leg of the offering would be refunded by it without any interest, Ant said in a statement to the Hong Kong stock exchange on Wednesday. For investors who had subscribed for Ant shares, handling fees and interest rates on margin loans would be waived by them, said several Hong Kong brokers.
There were no comments on the issue available from major lenders HSBC and BOC Hong Kong Holdings Ltd. Online challenger, Tencent-backed Futu and Bright Smart Securities, was one of the brokerages.