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Why does Big Tech stock soar after Election Day


The IPO incident of Jack Ma Ant shows that Xi Jinping is in power

(Bloomberg) – China’s abrupt halt on the launch of the world’s largest stock market sends global investors a clear message: All financial openings will only be done with favorable conditions for President Xi Jinping and the Communist Party. the world on Tuesday suspended an IPO of Ant Group Co., a fintech company owned by billionaire Jack Ma ̵

1; China’s second-richest person. The decision was made just two days before the stock was traded in a listing attracting at least $ 3 trillion in orders from individual investors. The timing of the decision again shows that for Xi and the party, financial and political stability are given priority over concessions. control the economy – especially for a private company. In Beijing’s view, the IPO could give Ant too much influence on the financial system, causing greater risks, which could ultimately undermine the party’s ability to hold power. . “The party is flexing its muscles,” said associate professor Victor Shih at UC San Diego and author of “Faces and Finances in China: High Conflict and Inflation”. “Jack Ma is saying that you will have the biggest IPO in the world, but that is not a big problem for the CCP, the second largest economy watchdog in the world.” While the party has plenty of tools to quell dissidents, local officials have sometimes struggled to contain rage over confusing issues such as labor disputes and fraud. investment and caused environmental disasters. In order to mitigate any threat to the financial system or party power, over the past decade, Xi’s government has proven that it has no problem defeating billionaires and public officials. private company. For foreign investors, Ant saga has questioned the viability of Hong Kong and Shanghai as a high-end financial hub. That was especially so after China last week signaled more openness to its new five-year plan, setting time to progress with past promises of allowing more and gradual overseas access. loosening controls on the yuan and capital flows. Fraser Howie, author of “Red Capitalism: The Fragile Financial Fund of China’s Extraordinary Rise”, Fraser Howie, author of “Red Capitalism: The Fragile Financial Funds of extraordinary rise of China ”, said:“ Howie said. “Therefore, investors have to worry about the listing process in China, they will worry about disclosing information, they will worry about the arbitrary moves of the regulators.” Many analysts consider the move to be plausible, even when times are mixed. Chinese regulators say Ant’s business model allows them to charge higher fees for transactions efficiently while state-owned banks incur most of the risk. At the same time Ant is looking to list, the authorities are racing to develop rules that will force financial firms to require higher capital. They are also planning to create a digital yuan as part of an effort to maintain control over the stability of their payment system. The China Securities Regulatory Commission said Wednesday that it supports the Shanghai Stock Exchange’s decision to block an “hasty” initial public offering. . In a statement, changes in the fintech industry’s regulations have “huge impact” on Ant’s operating structure and profit model. China’s own measures to stifle innovation. The remarks came after Vice Chairman Vuong Ky Son – a close relative of Mr. Xi – called for a balance between financial innovation and strong regulations to prevent financial risks. “It seems intentionally or not, Ma has openly challenged and criticized the Chinese government’s approach to Andrew Batson, director of China research at Gavekal Research Limited., To write in a note. Her comments came just before the Communist Party held a key meeting to plan the country’s economy for the next 15 years, addressing issues of technology, financial stability and economic growth. to the top of the national agenda. After it ended last week, regulators introduced new regulations affecting Ant’s business and summoned Ma to Beijing for a rare meeting on Monday. In China, state media highlighted Ant’s failure to comply with regulatory requirements while exhibiting strong government market surveillance and risk controls to protect consumers. use. In a comment late Tuesday, the party-backed Economic Daily said the suspension of the IPO showed “every capital market link has perfect rules and serious monitoring methods. . ” “This is understandable from a legal perspective and it is still a better result for Lv Changshun, an analyst at Beijing Zhonghe Yingtai Management Consulting Company, said:“ Policy makers innovation is acceptable, but that is not financial system risk. According to Gao Zhikai, an IPO prospectus of USAnt, avoiding that risk is a key foundation for driving more capital market reforms. “Former Chinese diplomat and former China policy advisor to the Hong Kong Securities and Futures Commission. When regulators saw that Ant could do things that had no limits on commercial lenders, he said, “Someone rang the bell and got the regulators’ attention.” “Traditional financial institutions, especially banks, will probably welcome this decision when the dust settles,” he said. “It also doesn’t create a regulatory disadvantage for Ant Group. It reminds Ant that they need to treat some of the bank’s operations as a commercial bank. “The Chinese authorities have intensified oversight of private companies for several years. In 2018, the central bank identified Ant and other companies as financial holders, leaving them under closer scrutiny for their growing role in cash flows and financial pipelines. of the country. That same year, regulators arrested Anbang Insurance Group Co., which symbolizes the recent era of large Chinese takeovers and imprisoned its former chairman for fraud. HNA Group Co. and Tomorrow Holding Co. was later taken over or broken up by the state, while China Evergrande Group in September warned of a potential cash crisis that could pose a systemic risk to China. China’s most famous businessman in communist country. The global advocacy tycoon is a special adviser to the United Nations, has debated Elon Musk on international forums and is a moderator of annual Davos meetings. He has created two companies worth hundreds of billions of dollars and claims to be the champion for the little guy and small businesses. On Wednesday, however, posts on Chinese social media platforms were largely unpopular with Ma. An anonymous Weibo poster wrote, “If you don’t go out looking for trouble, trouble won’t find you.” Another quipped that “it is time for Jack Ma to wake up, listen more often and talk less.” Despite Ma’s public dress and reputational blow to the Chinese market, many investors remain optimistic about Ant’s IPO. The requirement for higher liquidity will hurt sentiment, but that’s not necessarily a bad thing for a listing that sees shares sell for 50% higher in pre-IPO gray market trading. Ram Parameswaran, founder of San Francisco-based Octahedron Capital Management, the hedge fund holds a stake in Alibaba Group Holding Ltd. and is planning to invest in IPO Ant, arguing that the suspension is positive to quell speculation in stocks. Shares in Alibaba, which owns 1/3 Ant, fell 7.5% in Hong Kong, the highest level since its launch in the city last year. “What is clear to me is that the lending business will grow more slowly over the next few years,” Parameswaran said. “That in the larger scheme of things is positive for industry and Ant. For global investors, however, this episode is likely to reinforce the notion that the party calls all the hits when it comes to big business decisions – and any opening measures will. is carefully calibrated for impact on the Communist Party. That could be even more important in the coming years as China seeks to develop its own core technologies in the face of increasing pressure from the US, which will likely continue regardless of who wins. in Tuesday’s elections. “Kendra Schaefer, head of digital research at consulting firm Trivium China in Beijing, said the signal to the big tech players not participating is too great compared to the UK and that the side is still “However, internationally, moves like these are little to alleviate fears that tech companies going out won’t be dragged into Beijing.” (Updated with CSRC statement in paragraph 10) For more articles like these, please visit us at bloomberg.comSubscribe now to stay on top with the most trusted source of business news. © 2020 Bloomberg LP

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