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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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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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