💬 Did Jack Ma’s Comments Cost Him $3B?

Carpet pulled from under the feet of Ant Group at the last minute.

Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Tuesday Close) 3,369.16 +58.92 (1.78%)

NASDAQ (Tuesday Close) 11,160.57 +202.96 (1.85%)

FTSE 100 (5 PM IST) 5805.44 +18.67 (0.32%)

NIFTY 50 (Today’s Close) 11,908.50 +95.00 (0.80%)

USDINR (5 PM IST) 74.68 (1 Year +5.44%)

💬 Did Jack Ma’s Comments Cost Him $3B?

The carpet was pulled from under the feet of Ant Group Co. Ltd. literally at the last minute. The company was all set for the world’s largest IPO. Chinese regulators raised concerns about the company satisfying requirements, effectively stopping the IPO in its tracks.

Background: Jack Ma, a 56-year old former English teacher, co-founded Alibaba with $60,000 and turned it into China’s largest e-commerce retailer. Alibaba listed on NYSE in 2014 and was the largest IPO at the time at $24B.

Over the last decade, Ant, an affiliate of Ma’s Alibaba Group, emerged as the world’s largest fintech company, reshaping the lives of several ordinary Chinese. Alipay – Ant’s universal super app – provides services for everything from insurance to credit to investments. But its meteoric rise, and Ma’s growing global reputation, posed a threat to China’s state-run lenders and their political benefactors.

Two weeks ago, Jack Ma spoke at a high-profile financial forum in Shanghai and opined on China’s banking system. In that speech, he expressed concerns over the lack of a financial ecosystem in China and labeled the Chinese banks as “pawnshops.”

What Happened?: The consequences of the comments came this week. Beijing’s top financial regulators summoned Ma and dressed him down. Chinese regulators have been growing concerned about the rise of fintech platforms such as Ant Group, which they see as offering bank-like services despite not being a bank. They ordered stricter capital requirements and regulations for Ant Group Co.’s consumer credit business.

However, a bigger shock came last night. The Shanghai Stock Exchange halted Ant’s listing on its STAR Board. The Hong Kong IPO was suspended as well.

At $34B, this would have been the largest IPO giving Ant a market cap of $310B, having attracted $3T in orders. The IPO would also have boosted the fortunes of a group of early investors and employees, with more than a dozen other people slated to become billionaires.

Market Reaction: Ant’s halted IPO drove Alibaba’s stock down 8.13%, wiping off $3B from Jack Ma’s fortune. In before-hours trading, the stock is up 1.7%, having closed yesterday at $285.57.

Company Snapshot 📈

BABA $285.57 -25.27 (-8.13%)

Analyst Rating (56 Ratings) BUY 98%  HOLD 2%  SELL 0%

Newsworthy 📰

  • Helping Others: Palantir is reportedly in talks to help Britain with its beleaguered Covid contact tracing (PLTR -0.38%)
  • Sell-Off: AT&T considers selling significant minority stake in DirecTV (T +0.44%)
  • Prop-22 Pass: Uber and Lyft expected to prevail in California ballot measure exempting them from state labor law (UBER +2.76% LYFT +7.06% )

Later Today 🕒

  • 6.00 PM IST: Trade deficit
  • 7.30 PM IST: ISM services index
  • After Market Close: Qualcomm Inc Earnings (QCOM)
  • After Market Close: GoDaddy Inc Earnings (GDDY)

Fun Fact of The Day 🌞

The feeling of getting lost inside a mall is known as the Gruen transfer.

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