November 4, 2020
In a surprise and shocking move Chinese state regulators have stepped in to cancel the IPO of the fintech monolith ANT, one third of which is owned by Jack Ma of Alibaba Inc within days of its opening on November 3rd 2020. This sudden move has thrown financial markets into a tizzy and placed a question mark on the frenzied bids placed for US$3 Trillion. The amounts paid will now have to be returned. Alibaba shares took a beating on the bourses dropping in excess of 7% and wiping away US$3 Billion from Ma’s personal fortune.
The IPO was touted as a showpiece for Chinese financial prowess and the offer was oversubscribed by about 850 times on the SSE and 330 times on the SEHK. The listing price was pegged at US$ 80 per share and with a market capitalization of US$ 315 billion it would have dwarfed JP Morgan and Goldman Sachs.
That Jack Ma was creating misgivings in the Chinese government circles is a known fact. His utterances in recent conferences where he questioned the local and global regulators wisdom on policies was also not received well. It is quite possible that the growth of financial behemoth which would cast a long shadow over the Chinese State institutions and banks triggered the pulling of the plug.
Coupled with the recent Chinese mis-steps on the political and health sectors this would add to the woes of the people in Hong Kong and elsewhere.It remains to be seen how the world’s financial markets would react to this move since it is not exactly reassuring when government regulators pull the rug from under their own creation’s legs at the eleventh hour. One can confidently say that Chinese offerings in future will evoke less enthusiasm . One wonders if this could also herald a long winter of financial discontent.
The author of the column is Ravichandran. S.N , Co-anchor Data Security Council of India
Disclaimer: The views expressed above are the author’s own