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World 'Mom and pop' investors dismayed by China's scrapping of Ant IPO

12:30  04 november  2020
12:30  04 november  2020 Source:   msn.com

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China Halts Ant Group’ s IPO , Throwing Ma Empire Into Turmoil. The IPO was on pace to break records. It had attracted at least trillion of orders from individual investors for its dual listing in Hong Kong and Shanghai, and in the preliminary price consultation of its Shanghai IPO , institutional

The world' s largest initial public offering ( IPO ) was split fairly evenly between Shanghai' s STAR Market and Hong Kong, raising about billion The Shanghai portion of Ant ' s IPO was heavily skewed toward strategic and institutional investors . Retail investors ' chance of buying Ant shares

Hong Kong's "mom and pop" investors had been looking forward to an instant jackpot via Ant Group's record-busting $34 billion IPO. Instead, China's shock suspension of the listing has left them baffled and angry.

a man standing in front of a building: Many in Hong Kong expressed frustration at how Chinese regulators made their decision so late © Anthony WALLACE Many in Hong Kong expressed frustration at how Chinese regulators made their decision so late chart, table: Chart showing some of the world's biggest stock IPOs to date © Janis LATVELS Chart showing some of the world's biggest stock IPOs to date

The financial tech titan's listing came crashing down on Tuesday evening as regulators pulled the plug just two days before its dual debut in Hong Kong and Shanghai.

Demand was so strong in Hong Kong that Ant announced it was going to stop selling a day early, while in Shanghai it was more than 800 times over-subscribed.

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The world' s largest initial public offering ( IPO ) was split fairly evenly between Shanghai' s STAR Market and Hong Kong, raising about billion The Shanghai portion of Ant ' s IPO was heavily skewed toward strategic and institutional investors . Retail investors ' chance of buying Ant shares

Alibaba Drops After China Suspends IPO of Finance Affiliate Ant . China Stops Jack Ma’ s Billion Ant IPO From Going Forward. The surprise move in China is stirring questions from investors about whether a broader regulatory shift could be underway.

Unlike in mainland China, Hong Kong allows margin financing, permitting investors to borrow large sums of money in the hopes of boosting their chance of share allocation.

a sign on the side of a building: Ant Group's record-busting IPO was valued at $34 billion © Hector RETAMAL Ant Group's record-busting IPO was valued at $34 billion

Investors bet on a debut share spike, pay back the loan and pocket the gains while banks and brokers make money from interest.

Barring small interest payments -- which some institutions may forgive -- investors will get their money back.

But many in Hong Kong nonetheless expressed frustration at how Chinese regulators had made their decision so late.

"This is an international joke," fumed Winni Cheung, 31 and self-employed who invested over HK$200,000 ($25,800) on Ant.

Adding salt to her wounds, she said, was the HK$10,000 her shares in Alibaba -- Ant's parent company -- had lost on Wednesday morning as markets reacted.

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Ant Group' s highly anticipated IPO has been abruptly suspended following a meeting between the company' s billionaire co-founder Jack Ma and regulators in China .

China ' s Ant Group is expected to double its market value on debut, as unmet demand from mom - and - pop investors and an impending inclusion in major global indexes could offset worries about tighter regulations, fund managers said. The fintech giant will be listed in Hong Kong and Shanghai's

"(Chinese) state media said the suspension was to protect investors like us but if they really wanted to protect us, they should have stopped the IPO when the company submitted its application for scrutiny," she added.

- No payday -

Jackson Wong, an asset management director at Amber Hill Capital, said investors were "expecting a huge pop on the first day... anything from 30 to 50 percent".

"So that would be a pretty good payday for lucky investors who will be allotted shares. Now, instead, they will not get any allotment, the IPO is not going to come. And also they might face some interest payment on their margins."


Video: Ant Group gets final nod from Chinese regulators for dual Hong Kong-Shanghai listing (CNBC)

Chris Liu pulled together a HK$1.3 million pot for Ant shares -- HK$900,000 from margin financing.

"When I saw the news last night, my first reaction was that the Chinese government is really unbelievable," he told AFP.  "I didn't expect the IPO to go wrong like this."

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It was also a sensational draw for mom - and - pop investors in China and Hong Kong who bid a record trillion, equivalent to the annual economic output of Britain, while for the The three Western banks are co-sponsors of Ant ' s Hong Kong IPO along with CICC. (GRAPHIC: Alibaba shares plunge - https

public offering of Ant Group because of changes in the regulatory environment, Bloomberg first reported Tuesday—the sudden decision from Chinese regulators puts Ant Group’ s record-breaking IPO in jeopardy. China Suspends Jack Ma’ s Ant Group Shanghai IPO After Warning (Bloomberg).

It has been a grim economic year for Hong Kong, hit by the US-China trade war, the coronavirus pandemic and last year's roiling pro-democracy protests.

The city is deep in recession, unemployment is rising and the stock exchange is down about eight percent since the start of the year.

But first time listings have been a rare opportunity -- as of September Hong Kong was third in the global IPO ranking for 2020, according to KPMG.

Bankers will be mourning the loss of some handsome commissions.

Three of the four IPO sponsors in Hong Kong were US banks. Alongside China International Capital Corp, Citigroup, JP Morgan Chase and Morgan Stanley were expected to reap the lion's share of the estimated $400 million in fees from both Ant and investors, according to Bloomberg.

- 'What can we do?' -

One regular investor, who asked to only give his surname Choy, said he had pulled together HK$500,000 cash and a further HK$4.5 million in margin financing.

"I invested in new IPOs all year round, no way I wasn't going to invest in this one," he told AFP.

Choy, who described himself as a committed stock market "gambler", shrugged off the interest payment losses of around HK$4,000.

China's Ant Group postpones IPO under regulatory pressure

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China Halts Ant ’s Record IPO , Throwing Ma’s Empire Into Turmoil. But its ascendance -- and Ma’s growing global reputation -- has also posed a threat to China ’ s state-run lenders and their political benefactors.Tuesday’s developments left bankers and global investors groping for answers.

Ant apologised to investors in a stock market filing for "any inconvenience" and said it would follow up with them, but gave scant details on what the problem was aside from calling it a "major event." "There has been so much excitement around this IPO and there is clearly deep disappointment from the

"If you count my earnings from IPOs all year round, this is not a big loss to me at all," he said.

But he was unhappy with how things unfolded.

"The suspension was announced way too late, but China has no rules. The regime is a jerk, but we can still earn money off it."

China's last–minute decision was quickly interpreted as a signal from the nation's communist leaders that they were uncomfortable with the enormous influence of Ant, which has helped revolutionise commerce and personal finance but eroded the power of state financial institutions.

The opaque and often unpredictable relationship between the Chinese state and business is something many in semi-autonomous Hong Kong are becoming more familiar with.

Beijing has blanketed the city in a sweeping national security law following months of democracy protests last year and has made it clear it expects big business in the finance hub to get on side.

Liu said he felt Ant's sudden troubles were a reminder of the Chinese state's power.

"When a giant like Ant can fall like this, what can we ordinary people do?"

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Hopes of divided US legislature drive stocks higher .
Investors bet on a Joe Biden US presidential victory, but with Senate remaining with Republicans, blocking tax hikes.Investors expect Democrat Joe Biden to beat President Donald Trump and the Republicans to retain control of the Senate, allowing them to block the Democrats’ agenda, such as corporate tax hikes and massive borrowing for large spending.

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