According to the latest news, Ant Technology Group’s listing plans have been abruptly halted by Chinese regulatory authorities. As seen in the notice sent by the Shanghai Stock Exchange (SSE), the decision to call for a halt has a lot to do with the dispute between the company’s de facto controller, Jack Ma, and regulators over the regulation of the mobile payment business.
On Tuesday (Nov. 3), the SSE sent a notice to Ant Technology Group saying that the company’s top executives were jointly conducting regulatory interviews with relevant authorities and that changes in Ant’s fintech regulatory environment “may result in your company not meeting the conditions for listing or information disclosure requirements.” The SSE decided to suspend Ant Technology Group’s listing plans.
The SSE’s notice also required Ant Group to make an announcement in accordance with regulations.
In recent days, the disagreement between Ma, the de facto controller of Ant, and the regulator has attracted great public attention. But the SSE’s decision to suspend Ant’s listing plan still came as a shock to the outside world.
According to the original plan, Ant Technology would have listed and traded on the Shanghai Stock Exchange’s Koch version on Thursday, the day after tomorrow. The company had already listed in Hong Kong last week. Ant Technology has raised a record $37 billion in the two stock markets in what has been called the largest IPO offering in the world’s securities market.
Ant Technology Group is a mobile payment business spun off from Alibaba Group. The company currently has a market capitalization of about $315 billion.
The disagreement between Ma and regulators occurred at a financial summit organized by China’s Financial Stability and Development Committee under the State Council in Shanghai on Monday. Wang Qishan, China’s vice president, delivered a keynote speech at the event, alerting regulators to the systemic risks that currently exist in China’s financial system.
In his speech, Ma expressed disagreement with what Wang Qishan called systemic financial risks and questioned the current model of financial regulation in China.
Ma argued that China has yet to establish a complete financial system and that the so-called systemic risk simply does not exist. He criticized the backward thinking of financial regulation, which only knows how to control risks but does not pay attention to encourage innovation, and it is difficult to lead the future of new finance.
Ma pointed out that supervision and management are different. Supervision is to watch your development, and management is to manage only when there are problems. Ma Yun said: “We now have a strong ability to manage, the ability to monitor is not enough. Good innovation is not afraid of supervision, but afraid of yesterday’s supervision, we can’t manage the airport in the same way we manage the train station, we can’t manage the future in the same way we managed yesterday.”
There was a surprisingly strong official reaction to Ma’s starkly different viewpoint. The Financial Times, a subsidiary of China’s central bank, published an article for three days in a row to refute Ma’s views. The article said that new finance, represented by financial technology, has special risks, and that some large technology companies have distorted financial values, induce excessive debt consumption, and are prone to market monopoly and unfair competition, as well as the violation of customer privacy.
According to the article, Ant Group has as many as one billion individual users and more than 8,000 institutional users, and the scale of digital payment transactions has reached RMB 118 trillion yuan. Once the risk exposure occurs, it will cause serious risk contagion.
Next, four regulators – China’s central bank, the China Securities Regulatory Commission, the China Banking and Insurance Regulatory Commission and the State Administration of Foreign Exchange – jointly interviewed Ant Group’s top executives including de facto controller Jack Ma, group chairman Jing Xiandong and president Hu Xiaoming on Monday. Observers said such joint interviews by multiple government agencies with the head of a particular company are also extremely rare in China, where such interviews are commonplace.
The content of the interviews, however, was not immediately made public. By that evening, Ant Technology Group only said in general that it would implement the views of the interview, and continue along the “prudent innovation, embrace regulation, service entities, open and win-win” approach.
Reuters sources said on Tuesday (November 3) that four government regulators made it clear to Ant Group executives in the interview that the company’s lucrative mobile payment business would be more strictly regulated by the government.
The regulators said the focus of government oversight would be on its cash cow (a business with steady profits) and consumer lending businesses. The government will impose stricter requirements on Ant Financial’s capital adequacy and leverage ratios.
The sources said the regulator was very “surprised” by Ant Financial’s business, credit business scale and earnings data. Reuters said the regulator also asked Ant Financial to effectively comply with microfinance rules in the interview.
As of June this year, Ant Group’s consumer lending balance was reportedly 1.7 trillion yuan, accounting for 21 percent of the total consumer loans issued by China’s savings financial institutions.
Mobile payments are a piece and lucrative industry, and China’s state-owned banks have long been unhappy with Ant’s monopoly on the pie. The conflict between Jack Ma and the regulatory authorities developed so quickly that even observers were caught a bit off guard. In this round, Ma seems to be over before it even starts. No wonder netizens dubbed Jack Ma as “Ma has already obeyed” and “Ma has today obeyed” in Ant Financial Services.
Fund managers are very optimistic about the listing of Ant Technology shares. They estimate that the company’s market capitalization may be double the original plan. The number of Auntie and Uncle investors buying this stock has also exceeded expectations. There is a good chance that Ant’s stock will make its way into some of the major global stock indices.
Many fund managers in China see Ant Financial’s stock as a “must own” stock with huge growth potential for their funds. Guangzhou Zeyuan Investment Management Co. estimates that Ant Financial’s growth in Shanghai could be as high as 150%.
The Hangzhou, China-based company is the leader in China’s mobile payments industry, which includes providing loans, insurance, asset management and technology for financial entities, among other businesses.
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