Shares of ant-linked companies rise on news of Jack Mac’s relinquishment of control; alibaba jumps
Jan 9 (Reuters) – Shares of Chinese publicly traded companies with Ant Group as the largest shareholder rose on Monday after announcements that Ant founder Jack Ma will relinquish control of the fintech giant following a revision.
Ma’s Alibaba Hong Kong-listed shares (9988.HK) jumped 7%.
Longshine Technology Group Co Ltd Shares (300682.SZ)jilin zhengyuan (003029.SZ)Shanghai Golden Bridge Infotech Co. (603918.SS)Orbbec Inc. (688322.SS) and Hundsun Technologies (600570.SS) also pink. Ant indirectly owns stakes ranging from more than 20% to just over 5% in those companies.
Ant said over the weekend that founder Jack Ma will relinquish control of the company.
The reform seeks to draw a line under a regulatory crackdown that was unleashed shortly after its giant stock market debut was thwarted two years ago.
Redmond Wong, Greater China market strategist at Saxo Markets, Hong Kong, said Jack Ma’s handover of control of Ant and other businesses would help remove some uncertainties and pave the way for developing and expanding the group’s business. .
“It should have removed some of the authorities’ concerns about the group, as the change was likely a negotiated outcome with the authorities,” Wong said. “And investor confidence towards China’s Internet sector is likely to improve further.”
Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC), said in an interview with China’s official Xinhua news agency published on Jan. 7 that the rectification of the financial business of 14 platform companies has been “basically complete”, while some issues need to be resolved. Guo did not name the companies.
Authorities will adopt “standard regulation” later and encourage platform companies to operate in a compliant manner, Guo said.
IPO SPECULATION
Ant’s $37 billion initial public offering, which would have been the world’s largest, was canceled at the last minute in November 2020, prompting a forced restructuring of the fintech firm and speculation that the billionaire Chinese would have to cede control.
“Investors can stop guessing and can finally assign a risk premium to the new company that Ant has become,” Alexander Sirakov, managing partner at Aquariusx, a Shanghai-based investment consultancy, said after Ant’s announcement. .
Morgan Stanley, in a research note on Jan. 8, said it would upgrade Alibaba to its “top pick” for shares in China’s internet industry by 2023, citing regulatory easing as part of the reasons for its decision. .
While some analysts have said relinquishing control could clear the way for Ant to revive its initial public offering (IPO), the changes announced on Saturday, however, are likely to result in further delay due to listing regulations.
China’s national A-share market requires companies to wait three years after a change of control to list. The wait is two years on Shanghai’s Nasdaq-style STAR market and one year on Hong Kong.
Ant said Sunday that it has no plans to initiate an initial public offering.
The CBIRC on December 30 approved a capital increase in Ant’s consumer finance arm to 18.5 billion yuan ($2.68 billion) from 8 billion yuan in the latest step of its restructuring.
Reuters reported in November, citing sources, that Chinese authorities are about to impose a fine of more than $1 billion on Ant Group, a move that may set the stage for an end to the two-year-long regulatory review of the fintech company. read more
Li Nan, a finance professor at Shanghai Jiaotong University, said however that Ant’s inherent problems persist after its change of control.
“The key problem in Ant’s business model is to embed wealth management and loan insurance (Huabei and Jiebei) into the payment platform (Alipay), bypassing necessary risk management regulation such as the sufficiency ratio of capital, liquidity ratio and loan loss reserve ratio,” Li said.
Leverage is still too high after Ant’s capital raise, he said.
Reporting by the Shanghai editorial staff, Roxanne Liu and Yingzhi Yang in Beijing, Josh Horwitz in Shanghai and Kane Wu in Hong Kong; Edited by Kim Coghill and Muralikumar Anantharaman
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