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Why US sanctions on China’s Ant Group may be an empty threat

Why US sanctions on China’s Ant Group may be an empty threat

Washington could soon expand its war against Chinese tech companies by setting its sights on Ant Group, the crown jewel of billionaire Jack Ma’s empire.



a group of people performing on a counter: People walk past the Ant Group Co. mascot displayed at the company's headquarters in Hangzhou, China, on Monday, Sept. 28, 2020. Jack Ma's Ant Group is seeking to raise $17.5 billion in its Hong Kong share sale and won't seek to lock in cornerstone investors, confident there will be plenty of demand for one of the largest equity deals in the financial hub, according to people familiar with the matter. Photographer: Qilai Shen/Bloomberg via Getty Images


© Qilai Shen/Bloomberg via Getty Images
People walk past the Ant Group Co. mascot displayed at the company’s headquarters in Hangzhou, China, on Monday, Sept. 28, 2020. Jack Ma’s Ant Group is seeking to raise $17.5 billion in its Hong Kong share sale and won’t seek to lock in cornerstone investors, confident there will be plenty of demand for one of the largest equity deals in the financial hub, according to people familiar with the matter. Photographer: Qilai Shen/Bloomberg via Getty Images

But there doesn’t appear to be much the US government could do to realistically hurt the digital finance company. Unlike other Chinese tech firms that have drawn the ire of Washington, Ant does little business in the United States.

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Ant Group was floated as a potential US target by Bloomberg News, which reported last week that the Trump administration is considering restrictions on Ant, as well as Tencent’s WeChat Pay. Citing people familiar with the matter, the news outlet said the US government fears that their digital payment platforms threaten national security.

WeChat is already facing scrutiny in the United States, but sanctions on Ant and its payments app Alipay would be an escalation in the US-China tech war. Alipay and WeChat Pay are daily necessities for hundreds of millions of Chinese merchants and consumers. Ant’s wealth management products are also used by millions.

US authorities are worried about Ant because it represents “new modes of finance that they can no longer control,” said Cameron Johnson, adjunct faculty instructor at New York University in Shanghai and partner at consulting firm Tidal Wave Solutions.

It’s not clear how close Washington may be

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Analysis: Ant Group’s $35 billion IPO unlikely to be hurt by possible U.S. curbs

Analysis: Ant Group’s $35 billion IPO unlikely to be hurt by possible U.S. curbs

(This Oct. 8 story corrects paragraph 2 to say Trump administration officials, not Trump, are considering the move)

HONG KONG (Reuters) – Ant Group’s $35 billion initial public offering (IPO) is unlikely to suffer from any U.S. restrictions on the Chinese financial technology giant due to its very limited overseas presence, potential investors and analysts said.

Trump administration officials are considering curbs on Ant, an affiliate of Chinese e-commerce firm Alibaba BABA.N, and Tencent 0700.HK over concerns their payment platforms threaten national security, Bloomberg News reported on Wednesday.

If implemented, the restrictions would illustrate how Trump’s administration is seeking to prevent Chinese companies from embedding themselves in the U.S. financial system before they become a significant competitive threat.

Ant said it was not aware of any discussions within the administration about restrictions. Tencent and the White House did not immediately respond to requests for comment.

Ant is working towards a dual-listing in Shanghai and Hong Kong possibly as soon as this month in what sources have said could be the world’s largest IPO, surpassing oil giant Saudi Aramco’s 2222.SE $29.4 billion float in December.

Ant’s Alipay and Tencent’s WeChat payment platforms are used primarily by Chinese citizens with accounts in renminbi. Most of their U.S. interactions are with merchants accepting payments from Chinese travelers and businesses in the country.

“Basically the overseas revenue accounts for maybe 5% or less for Ant Group. That means for the U.S. revenue contribution it would be even less than that,” said Morningstar senior equity analyst Chelsey Tam.

“I’m sure investors will ask about it during the roadshow but it’s quite easy for investors to understand that if Alipay and Wechat Pay go overseas the U.S. is probably not the top priority,” Tam said.

Ant, which makes 95% of

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U.S. should try to delay IPO of China’s Ant Financial, Rubio says

U.S. should try to delay IPO of China’s Ant Financial, Rubio says

Adds details on IPO, background

WASHINGTON, Oct 9 (Reuters)Senator Marco Rubio, who has successfully urged the Trump administration to pursue probes into Chinese companies, called on Friday for the U.S. government to consider options to delay an initial public offering for China’s Ant Financial, the fintech arm of Chinese e-commerce giant Alibaba 9988.HK.

“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 Hong Kong leg of the IPO is being sponsored by China International Capital Corp (CICC) 3908.HK, Citigroup C.N, JPMorgan JPM.N, and Morgan Stanley MS.N. Credit Suisse CSGN.S is working as a joint global co-ordinator. Goldman Sachs GS.N has also joined the list.

It was not immediately clear how the U.S. government could postpone the listing of a Chinese company abroad.

The offering, estimated to be worth up to $30 billion, could attract scores of U.S. investors.

Ant Financial, based in the eastern Chinese city of Hangzhou, is 33% owned by Alibaba Group Holding Ltd and is controlled by Alibaba founder Jack Ma. Ant Financial did not immediately respond to a request for comment.

Rubio’s remarks are a sign of growing pressure among China hardliners in Congress, within the administration and elsewhere for President Donald Trump to sanction Ant Financial before it lists later this month.

(Reporting by Alexandra Alper Editing by Paul Simao)

(([email protected]; +1(202)354-5865; Reuters Messaging: [email protected]https://twitter.com/alexalper?lang=en))

The views and opinions expressed herein are the views and opinions of the author and do not

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Lufax Holdings Looks To Capitalize On Ant Group’s Fintech Interest With An NYSE Listing

Lufax Holdings Looks To Capitalize On Ant Group’s Fintech Interest With An NYSE Listing

Key News

Asian equities were largely higher on light volumes, though the 50 stock Hang Seng Index was off a touch/-0.2% after rising off its intra-day low of -0.9%. The broader Hang Seng Composite gained +0.3% and the 204 Chinese companies listed in Hong Kong within the MSCI
MSCI
China All Shares Index gained +0.35%. Volumes have been anemic during the Chinese holiday, though things should pick up tomorrow as Shanghai & Shenzhen come back online. US-listed Chinese A-share ETFs are anticipating a healthy +3% open for the Mainland market tonight.

There was another quiet night in Hong Kong as the US focuses on the election and stimulus. Hong Kong volume leaders were Alibaba
BABA
Hong Kong, which gained +0.49%, Tencent, which was unchanged, Xiaomi, which fell -3.92%, Meituan Dianping, which fell -0.37%, BYD, which rose +5.94%, Sunny Optical, which rose +2.87% on the coming Apple
AAPL
release, Ping An Insurance, which gained +0.38% after Lufax Holdings, backed by Ping An Insurance, filed for a US listing, and JD.com Hong Kong, which was off a James Bond -0.07%. Macau gaming stocks were off as the Golden Week was less than Golden, based on weak visitor data due to coronavirus travel restrictions. Things should pick up tonight with Stock Connect, Shanghai, and Shenzhen reopening, though I predict volumes will really pick up next week. 

Mid-day yesterday, we had the announcement that the US would target Chinese mobile

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