Chinese Fintech Ant Group’s IPO in Trump Crosshairs
Ant Group’s march is what Trump fears the most
Back in 2008, Jack Ma, the founder of e-commerce giant Alibaba, made headlines when he bemoaned how hard it was for small businesses to get loans: “If the banks don’t change, we’ll change the banks.” He has not repeated his warning since then. He has not needed to.
Through Ant Group, which began life as a payments service on Alibaba, Mr Ma’s impact on the Chinese financial system has been profound. Ant has not only helped establish China as the world leader in digital transactions, it has given entrepreneurs and consumers far greater access to loans, and changed the way that people manage their money. It is now a giant in its own right. Over the past year it counted more than 1bn active users. Last year it handled $16trn in payments, nearly 25 times more than Paypal, the biggest online payment platform outside China.
“If and when Ant IPO is completed, in Chinese bourses, not at NY or London, and raises what is expected to be more than ARAMCO’s IPO did, you’ll know that investors, including US ones, have more faith in Jack Ma than in Donald Trump”.
Now, the giant Chinese fintech upstart is expected to raise more than $30bn, eclipsing Saudi Aramco’s debut last year and could soon outshine Wall Street banks –redefine global finance after what may be history’s largest ever IPO, says The Economist.
That would definitely have an impact on emerging markets –the Middle East and South Asia –both the regions are primed for holding of hands in their digital and small businesses domains. The twain are poised to meet, observers say.
With the Belt and Roadway, Chinese fintech will grow also, they say.
Notwithstanding these opportunities for Ant, a report in Asia Times says President Trump has aimed his crosshairs at the Chinese fintech company. “The timing of Donald Trump mulling restrictions on Ant’s Alipay and other Chinese digital payment platforms like Tencent Holdings is no coincidence”.
The report adds that it is aimed at disrupting a dual Hong Kong-Shanghai listing of Ant, as it is pulling attention – and capital – away from Wall Street. “It also suggests Trump’s “October Surprise” ahead of the November 3 election may be coaxing China into an even bigger trade war that he can spin for political gain”.
Nearly 96% of Ant’s revenue comes from mainland China. The other 4.4% of its revenue comes from other countries, and only a sliver of that from the U.S.
As Ant’s business was primarily in China, why the concern in Washington?
According to Yahoo Finance, Trump’s administration has concerns over the digital payment platforms the two companies (Ant and Tencent) own, Alipay and WeChat Pay, respectively, and the possibility that their apps could pose a risk to U.S. data security.
Also, Senator Marco Rubio, who has successfully urged the Trump administration to pursue investigations of Chinese companies, called on Friday for the U.S. government to consider options to delay Ant’s IPO.
“It’s outrageous that Wall Street is rewarding the Chinese Communist Party’s blatant crackdown on Hong Kong’s freedom and autonomy by orchestrating Ant Group’s IPO on the Hong Kong and Shanghai stock exchanges,” Rubio, a Republican, said in a statement to Reuters.
“The Administration should take a serious look at the options available to delay Ant Group’s IPO,” he added.
The company could become the latest victim of a years-long technology battle between Beijing and Washington that saw Trump cracked down on Huawei and then TikTok.
It was not immediately clear though how the U.S. government could postpone Ant’s listing abroad. If the story grows in volume and it appears the Trump administration will crack down on Ant and Tencent, it could put the giant Ant IPO in jeopardy.
May be not. Even if Trump pounces, says analyst Supun Walpola of LightStream Research, “there is a lot more growth left for Ant in China.”
According to a US-China and South Asia analyst based in Asia-Pacific, “If and when Ant IPO is completed, in Chinese bourses, not at NY or London, and raises what is expected to be more than ARAMCO’s IPO did, you’ll know that investors, including US ones, have more faith in Jack Ma than in Donald Trump”.
“This would be a dramatic proof of Trump’s failure and Ant’s success”.
But we need to discount the hype and see actually what Ant’s market valuation will be on the day, and the next day (when buyers start selling).
“It could be a dramatic couple of days, or not! I’ll watch with interest,” the analyst adds.
For now, a crackdown looks unlikely, or at least strange—not to mention that there may not be a Trump administration by January, according to YF.
Ant is the world’s highest-valued FinTech firm, and most valuable unicorn company, with a valuation of US$150 billion, according to Wikipedia.