China Merchants Bank Co. stock rose 18 per cent on the Hong Kong Stock Exchange. Ant, a big microcredit digital platform, is not in line with the new government rules and poses a threat to traditional banks. This is a heavy blow for billionaire Jack Ma, who is critical of China’s financial regulators.
Beijing (AsiaNews) – China’s financial regulators have stopped Ant Group Co.’s stock listing. This appears to favour the country’s state banks.
Another beneficiary is the China Merchants Bank Co., China’s main commercial bank, which gained 18 per cent since 3 November, just days before the Ant Group’s shares were scheduled to start trading in Shanghai and Hong Kong. The Ant Group leads in terms of digital payment and microcredit services.
The Agricultural Bank of China Ltd. also gained, whilst the Alibaba Group Holding Ltd. lost 4 per cent. Founded by Jack Ma, the latter is a major shareholder in Ant.
The Ant Group’s initial public offering (IPO) of US$ 35 billion was the largest ever. But China’s regulators stepped it saying that the company did not meet certain listing requirements for digital banking.
New regulatory requirements were announced on 2 November to preserve the stability of the China’s financial sector and tackle data privacy issues for individuals and businesses.
For analysts, the government's move is aimed at tilting financial markets in favour of traditional banks, whose fortunes are linked to those of the government.
In recent months, they have experienced considerable decline. China’s more than 200 online microlenders operate are very competitive compared to ordinary banks as they ensure easy access to finance for young customers, many of them are low-income earners with limited collateral.
Until the new regulations were introduced at the start of the month, lenders like Ant Group had a great competitive advantage over the big banks, such as no obligation to maintain a minimum level of capital. Under the new rules, they will have to up 5 billion yuan (US$ 750 million) in registered capital.
In the past year, Ant provided unsecured loans to more than 500 million Chinese, underwriting about 1.7 trillion yuan (US$ 257 billion) in consumer loans and 422 billion yuan (US$ 64 billion) in small business loans for small businesses and other financial institutions with limited distribution networks.
According to experts, once Ant adheres to the new rules, its IPO will not likely reach the levels announced before the recent stop.
For Caixin, Chinese authorities went after the Ant Group in order to get to Jack Ma. In a speech on 24 October, Ma criticised China’s regulatory system, which pushed the country’s financial regulators to act on digital microcredit.