HONG KONG • The biggest initial public offering (IPO) of all time has unleashed an investor frenzy for the record books.
Individual investors in Hong Kong and Shanghai placed orders worth at least US$3 trillion (S$4.1 trillion) for shares in Mr Jack Ma's Ant Group, enough money to buy JPMorgan Chase 10 times over.
Bidding was so intense in Hong Kong that one brokerage's platform briefly shut down after becoming overwhelmed by orders.
Demand for the retail portion in Shanghai exceeded initial supply by more than 870 times.
The stampede is fuelling predictions of a first-day pop next Thursday, when Ant is due to start trading, even as sceptics warn of risks including the US election, tightening regulations in China and rising Covid-19 cases worldwide.
Whether Ant surges or not, the Chinese fintech behemoth's US$35 billion-plus IPO represents a major vote of confidence in a company that could end up shaping the future of global finance. It also underscores China Inc's ability to marshal huge amounts of capital without tapping American markets, a win for Beijing as it tries to reduce its vulnerability to the threat of US financial sanctions.
Software developer Chen Wu, 35, was among those scrambling for a piece of Ant's offering this week. His brokerage allowed a small number of clients to supercharge their bets using 33 times leverage, handing out allocations on a first-come, first-served basis.
"When it was released at noon, I refreshed my page again and again, clicked and clicked," Mr Wu said on Tuesday, after securing a HK$5.7 million (S$1 million) block of Ant shares, equivalent to more than 80 per cent of his existing equity portfolio. "I got it around 12.01pm and the quota ran out within minutes. I was lucky."
Ant is benefiting from the unusually buoyant mood among retail investors globally, but it is not just the mom-and-pop crowd driving demand. Big-name money managers, including Temasek, T. Rowe Price Group and UBS Asset Management, are also angling for allocations. Institutions and strategic investors may take up about 96 per cent of the offering in Shanghai and 97.5 per cent in Hong Kong, according to Ant's prospectus.
Retail investors are still likely to have a significant impact once trading begins - particularly in Shanghai where individuals drive the vast majority of daily turnover. About 5.16 million retail accounts placed a record 19.05 trillion yuan (S$3.9 trillion) of orders for Ant shares on the city's Star market, where traders are required to have a minimum 500,000 yuan in their accounts.
In Hong Kong, the retail portion drew more than HK$1.3 trillion of orders as of 11am yesterday, or 394 times the initial supply, the South China Morning Post reported, citing people in the know.
Many investors in the city took advantage of historically low interest rates to amplify their bets with borrowed money.
"There has been unprecedented investor interest," said Mr Jasper Chan, assistant manager of corporate finance at Phillip Securities, which allocated all of the HK$20 billion it set aside for Ant margin loans on the first day they became available. Mr Chan said demand for the IPO has been more broad-based than usual because of the small minimum lot size of 50 shares, which equates to about HK$4,040.
Ms Yuki Chung, a 30-year-old university teaching assistant, said she plans to bid for HK$500,000 of Ant shares, 90 per cent of which will be funded by borrowed money. "Everyone is taking part in the IPO, so I feel like I should too. I don't want to lose out."
Others are wary of placing too much faith in a rally. Media professional Elle Lam, 28, who has invested in several Hong Kong IPOs this year, plans to order just one 50-share lot of Ant, using the rest of her available cash to bid on the Hong Kong government's upcoming issuance of inflation-linked bonds. "People are certainly too hyped up," Ms Lam said. "I think Ant's valuation is too expensive, so the gain on the debut day could be limited."