Abrupt halt of Ant Group’s mega-IPO leaves investors guessing

In this news, we discuss the Abrupt halt of Ant Group’s mega-IPO leaves investors guessing.

SINGAPORE / LONDON (Reuters) – Investors were shocked by Ant Group’s $ 37 billion trading suspension on Tuesday, with many of them spending weeks studying the deal and lobbying bankers to secure shares in what was to be the world’s largest initial public offering.

Ant interrupted its scheduled listings in Shanghai and Hong Kong less than 48 hours before publication following a meeting between billionaire founder Jack Ma and Chinese financial regulators.

Ant apologized to investors in a stock file for “any inconvenience” and said he would follow up with them, but gave few details about the problem other than calling it an “event.” major”.

“There has been so much excitement around this IPO and there is clearly deep disappointment from the markets about this unexpected curve ball,” said Victoria Scholar, Market Analyst at IG.

Investors were concerned that regulators’ problem with the deal would spread beyond Ant to other Chinese tech stocks.

Shares of Alibaba, the e-commerce giant also founded by Ma, fell 10% in New York City trading, while shares of game company Tencent Holdings Ltd fell 3.5% in Frankfurt.

“For now, the markets will sell Alibaba and possibly Tencent along with other relevant exposures,” said Dave Wang, portfolio manager at Nuvest Capital in Singapore.

“If this is an isolated incident for Ant, then new economy stocks that have done well so far should be fine … otherwise, markets might start to assess regulatory uncertainty over more. strict on private companies and we could see a significant pullback on Chinese growth stocks. “

An investor in a state-backed company in China, which held a stake before the IPO in Ant, said the delay had left them wondering if it would become politically difficult to own the stock even if the IPO was getting back on track.

“Do Jack Ma and Ant have bigger problems with Chinese regulators? Would it be considered politically incorrect to continue investing in Ant’s IPO if it picks up later? Said the investor, who declined to be named.

More than $ 3 trillion from just retail investors had been placed in offers for Ant, a factor some believe likely prompted Chinese supervisors to take a tougher stance.

“It is quite clear that the scale of oversubscription and the influence of Alibaba have become a source of concern for regulators,” said Justin Tang, head of Asian research at United First Partners in Singapore.

For William de Gale, co-founder and senior portfolio manager of BlueBox Asset Management, who opted out of the deal from the start, the suspension was a justification for their stance on Chinese financial firms.

“I think this shows why we don’t particularly like these companies – there is always a risk of capricious behavior on the part of management or regulators, none of which are subject to reliable or predictable governance,” said he declared.

Reporting by Anshuman Daga in Sinagpore, Julie Zhu in Hong Kong, Sinead Cruise in New York and Simon Jessop in London; Written by Rachel Armstrong; Edited by Matthew Lewis

Original © Thomson Reuters

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