‘Mom and pop’ investors dismayed by China’s scrapping of Ant IPO

by AFP / pic by AFP

HONG KONG • Hong Kong’s “mom and pop” investors had been looking forward to an instant jackpot via Ant Group’s record-busting US$34 billion (RM142.8 billion) IPO. Instead, China’s shock suspension of the listing has left them baffled and angry.

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.

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.

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 (RM120,000) on Ant.

Adding salt to her wounds, she said, was the HK$10,000 her shares in Alibaba Group Holding Ltd — Ant’s parent company — had lost yesterday morning as markets reacted.

“(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.

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%”.

“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.”

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.”

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 8% since the start of the year. — AFP