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What will Ant enquiry unearth?

Ant Group employees were already busy scurrying to build splendid nests. They were anticipating a sweet windfall from an unprecedented US$37 billion initial public offering (IPO) that would see the company’s shares listed on the Shanghai and Hong Kong exchanges.

With future earnings totalling millions and even billions, these shareholders were snapping up luxurious properties in Hangzhou, where the Alibaba headquarters is located. My friends in the emerging Chinese city were miffed as home prices were driven up rapidly, in a place where prices per square foot already rival Seattle, where is based.

Then came a regulatory storm that wiped out the dream abodes of the worker ants. Just 48 hours before Ant’s market listing, Chinese regulators stepped in to call a halt on the November 5 stock sale. It was as abrupt as it was sensational when the plug was pulled on the largest trading debut in history.


In China, there is a cloud of speculation on the ground and in cyberspace regarding the move by the authorities.

My contacts at Ant are convinced that the IPO is merely shelved for the time being, and will be back on the table in six months or a year. Some online feel that it is a clap back by the regulators to Jack Ma’s plain criticism of the country’s financial system a couple of weeks ago in Shanghai. Other quarters believe that with the US election results in the balance, the Asian giant wishes to prevent Ant from becoming another spanner in trade relations the way TikTok and WeChat have been.

But all this remains a swirl of impenetrable fog. The truth is, no one quite knows the real reasons, save for the select few privy to talks between Ma and regulators on Nov 2, on “views regarding the health and stability of the financial sector”, according to the company.

Whatever the reason, the shock is quite a bit for investors to stomach. There was overwhelming, frenzied anticipation over what many perceived to be a once-in-a-lifetime investment opportunity. A record US$3 trillion worth of bids was amassed by mom-and-pop investors, with many borrowing heavily from banks and brokerages. Some Hong Kong brokers have already said that they would waive handling fees and interest rates on such margin loans.

A sure outcome however, will be an uncomfortable spotlight cast on China’s micro-lending industry.


You would think only criminals on the run are stopped at the border from fleeing the country. In China, it seems like cross-border travel of another group is closely watched. The chairman of a large fintech company here, who happens to be a friend of mine, told me that he was once stopped at the customs based on some obscure reasoning.

It appears lessons have been learnt from fraudulent peer-to-peer (P2P) lenders who have fled the nation with ill-gotten gains in recent years. The number of such firms has since been whittled down from 6,000 to 29 after a government-led crackdown. One of the biggest scams involved Ezubao, which cheated more than 900,000 investors of over US$8 billion in a major Ponzi scheme.

Fintech still remains a huge area of potential in China, which has a generation growing up on e-payments and where many individuals and small firms are unable to extract loans from the big Chinese banks. Yet excitement had dampened somewhat before the Ant debacle. Take Qudian for instance. Once touted as a game-changing fintech company, it had shares once worth more than US$20 each when it listed in 2017 to much buzz. Today, each share hovers slightly over a dollar in value.

Despite the hype about Ant, Chinese social media is rife with chatter about a supposed deeply controversial loan model it runs. There have been allusions to an opaqueness about the company’s loan products and the way money is raised for the firm to grow so quickly. For many in this camp, increased scrutiny and regulation of China’s microfinance industry is much welcome.


In sync with the theme of this year, the curtain of uncertainty hangs heavy on this episode. It is almost certain that Alibaba’s expansion into areas like South-east Asia will be set back. Its companies in the region include Indonesian e-wallet Dana. Nerves will be jangling in the region, as without follow-up investment, this could mean make or break for some of them.

All eyes will also be cast on upcoming blockbuster listings like TikTok rival Kuaishou, which aims to raise US$5 billion in the Hong Kong bourse. The close examination of Ant by a more stringent regulator would also send deterring signals to those looking to invest in China’s fintech industry.

In short, the Ant bite will cause some swelling and itching. But this could just be a crucial part of the healing process.


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