Alibaba shares plunge in Hong Kong after mega Ant listing frozen
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The plunge follows a shock decision by Chinese regulators to scrap the public listing of its spin-off financial tech company Ant Group.
PHOTO: REUTERS
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HONG KONG (BLOOMBERG, REUTERS) - Shares of Chinese e-commerce giant Alibaba tumbled in Hong Kong on Wednesday (Nov 4) following a shock decision by Chinese regulators to scrap the public listing of its spin-off fintech giant Ant Group.
Alibaba Group Holding, which owns about a third of Ant, tumbled as much as 9.3 per cent before closing 7.5 per cent lower.
But the Hang Seng tech index firmed 0.6 per cent, led by Meituan and Xiaomi rising 6 per cent and 7.9 per cent, respectively.
China stocks closed higher on Wednesday, underpinned by banking shares, as investors appeared to take in stride the Ant IPO's suspension, with a strong services activity survey aiding sentiment.
The Hang Seng index dipped just 0.2 per cent, with the gauge running in and out of positive territory in earlier trading as investors reacted to the US election uncertainty.
Overnight, Alibaba shares had slid 8.1 per cent in New York trading on Tuesday (Nov 3), wiping nearly US$68.4 billion off its value, much more than the amount Ant was planning to raise.
The shock decision to halt the share sale by Jack Ma's company on the eve of the listing is raising concern that government oversight of the country's successful private sector will tighten further. A gauge tracking Chinese technology firms in Hong Kong had rallied 64 per cent this year through Tuesday, versus a 10 per cent plunge in an index of Chinese firms that include state-owned enterprises such as banks and insurers.
The loss of the IPO is also a blow to China's efforts to make financial markets in Shanghai and Hong Kong viable rivals to New York. Beijing had been encouraging mainland firms to list back home to help insulate its economy from tensions with the US.
Chinese authorities on Tuesday said that the much-anticipated debut couldn't go ahead because there had been "significant change" in the regulatory environment, though they didn't provide more details. The decision also led to the postponement of Ant's Hong Kong listing.
The IPO was on pace to break records for investor interest. It had attracted at least US$3 trillion of orders from individual investors for its dual listing in Hong Kong and Shanghai, and in the preliminary price consultation of its Shanghai IPO, institutional investors subscribed for over 76 billion shares, more than 284 times the initial offering tranche.
The loss of the IPO is a blow to China's efforts to make financial markets in Shanghai and Hong Kong viable rivals to New York. Beijing had been encouraging mainland firms to list back home to help insulate its economy from tensions with the US.
