Ant Group IPO cancellation leaves Hong Kong stocks fluctuating

China’s decision to halt world’s biggest public share sale raises concerns over government oversight of private sector.

Hong Kong stock exchange [Bloomberg]
Technology shares have fallen sharply in Hong Kong after China halted the Ant Group IPO [File: Lam Yik/Bloomberg]

Hong Kong stocks swung between gains and losses after Chinese regulators scrapped Ant Group Co.’s $35 billion initial public offering, and as investors digested early results in the U.S. election.

Alibaba Group Holding Ltd., which owns about a third of Ant, tumbled as much as 9.3% and led declines on the Hang Seng Index, which pared an earlier drop to trade 0.45% higher as of 10:04 a.m. Alibaba rival Tencent Holdings Ltd. dropped as much as 4.1% before paring. Hong Kong Exchanges & Clearing Ltd. retreated as much as 4.2%. The Shanghai Composite Index was little changed, while the yuan slumped 0.4% as the dollar strengthened.

The shock decision to halt the share sale by Jack Ma’s company on the eve of the listing is raising concern that government oversight of the country’s successful private sector will tighten further. A gauge tracking Chinese technology firms in Hong Kong had rallied 64% this year through Tuesday, versus a 10% plunge in an index of Chinese firms that include state-owned enterprises such as banks and insurers.

Alibaba shares chart [Bloomberg]

Chinese authorities on Tuesday said that the much-anticipated debut couldn’t go ahead because there had been “significant change” in the regulatory environment, though they didn’t provide more details. The decision also led to the postponement of Ant’s Hong Kong listing.

The IPO was on pace to break records for investor interest. It had attracted at least $3 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 investors subscribed for over 76 billion shares, more than 284 times the initial offering tranche.

The loss of the IPO is a blow to China’s efforts to make financial markets in Shanghai and Hong Kong viable rivals to New York. Beijing had been encouraging mainland firms to list back home to help insulate its economy from tensions with the U.S.

Joe Biden pulled to an early lead over Donald Trump after winning a slew of traditionally Democratic states in the eastern U.S., while the president easily won several Republican strongholds in the south and Midwest, according to the Associated Press and networks.

Source: Bloomberg