Deferring Ant Group IPO a responsible move, say experts

The deferred dual listing of fintech giant Ant Group's gargantuan in Shanghai and Hong Kong is a responsible practice to protect investors and the market, said industry experts.

The Shanghai Stock Exchange said in an announcement Tuesday night that Ant Group has reported significant issues such as the change in supervision environment concerning fintech. Due to these changes, Ant Group may not be able to meet listing requirements at the bourse or to meet related information disclosure requirements. Therefore, Ant Group's listing on the technology-heavy STAR Market at the Shanghai bourse will be deferred, according to the announcement.

Ant Group announced later Tuesday night that the listing of the Hong Kong shares will also be halted.

While expressing apologies in an announcement released on Tuesday, Ant Group - the financial arm of Alibaba - said it will abide by the regulations of the two exchanges and disclose information promptly. It will "carry out innovation steadily, embrace supervision, serve the real economy and help to create an open and win-win situation so that the group can be tested and trusted", according to the announcement.

Public information shows that Shanghai Stock Exchange started on Aug 25 to deal with Ant Group's listing application on the STAR Market. China Securities Regulatory Commission approved on Oct 21 Ant Group's IPO registration.

According to the STAR Market listing regulations, the issuer and its sponsor should report to the exchange in time if major issues take place before the IPO. Application documents should be revised under such circumstances. If major issues occur after the CSRC's registration approval, the issuer may be disqualified for listing requirements and its listing should be suspended.

Ye Lin, professor at Renmin University's Law School, said that the deferred IPO of Ant Group announced by the Shanghai Stock Exchange is legal and justified, helping to protect the interest of investors, especially the individual investors.

China's four top financial regulators, including the People's Bank of China and the CSRC, held a joint regulatory talk with Alibaba's top management on Monday. Alibaba's founder Jack Ma, Ant Group's chairman Eric Jing and the fintech company's CEO Simon Hu attended the meeting. Further details were not provided.

The China Banking and Insurance Regulatory Commission and the central bank also released on Monday the drafted regulations on online small lending offered by microloan companies, for which public opinions will be solicited till Dec 2.

Zhang Zixue, professor of the civil, commercial and economic law school at China University of Political Science and Law, said that the regulatory body is making policy arrangements for online small-amount lending. This may not only exert major influence on Ant Group's listing, but also affect the interest of investors. The measurement taken by the Shanghai bourse is accordance with its supervision responsibility, said Zhang.

"Much concern has been recently expressed regarding the risks possibly incurred by large internet companies' entry into the financial industry. The issuer and the brokerage firms should completely evaluate the risks and problems and come up with precautionary policies. Strict revision on the issuer's eligibility and information disclosure should be conducted to protect investors' rights and the financial market's sustained development," he said.

The New York Stock Exchange listed Alibaba, which has about a 33 percent stake in Ant Group, saw its price plunge by 8.13 percent on Tuesday. The e-commerce giant, which is also listed on the Hong Kong stock exchange, also saw its price down by 7.2 percent on Wednesday.

Ant Group's debut on the Shanghai and Hong Kong exchanges was scheduled on Nov 5. It was poised to raise $34.4 billion via the IPO at the STAR Market, hitting a record and surpassing Saudi Aramco's $29.4 billion listing last year.