July 20, 2020 / 12:52 PM / 16 days ago

Breakingviews - Ant IPO puts Chinese bourses on collision course

The logo of Ant Financial Services Group, Alibaba's financial affiliate, is pictured at its headquarters in Hangzhou, Zhejiang province, China January 24, 2018. Picture taken January 24, 2018.

HONG KONG (Reuters Breakingviews) - Ant Group is putting Chinese bourses on a collision course. Jack Ma’s fintech champion wants to simultaneously list in Hong Kong and on Shanghai’s hot new STAR board. Ant can find global investors and hard currency in the former, and higher valuations in the latter.

    The reaction from both sides is telling. Within moments of Ant’s announcement of a planned dual-listing, Hong Kong’s Charles Li, the outgoing boss of the city’s stock market operator, said it affirmed the financial hub’s “role as the world’s leading international IPO market”. Likewise, the Shanghai Stock Exchange welcomed the news by lauding the STAR market as the “first choice” for technology companies to list.

   At first glance, the former British colony is a clear leader: It already boasts over 2,000 companies including tech heavyweight Tencent, which together are worth some $5 trillion in market value. That overshadows STAR, a pilot project launched last year to host earlier-stage startups, which is now home to 132 tickers collectively worth less than $70 billion. By comparison, Ant’s mooted value is over $200 billion.

    Capital controls and other restrictions in the People’s Republic mean Hong Kong remains the only place in China where local companies can raise hard currency and tap overseas demand. That’s important for Ant’s foreign backers, including U.S. private equity firms Carlyle and Warburg Pincus, which need offshore exits.

Yet as Beijing tightens its political grip over Hong Kong, it is freeing up mainland bourses to compete with it financially. Looser listing requirements and pricing rules have been rolled out in both Shanghai and Shenzhen, where tech valuations are typically higher. The STAR market, although small and volatile, is attracting stable anchor tenants including China’s top contract chipmaker, dual-listed Semiconductor Manufacturing International,, which raised nearly $7 billion last week in the mainland’s largest offering in a decade.

So both exchanges will be closely watching the details of Ant’s listing, including how much will be allocated to each venue. Having to share coveted tech listings ups the rivalry several notches. But in the end, there can be only one number one.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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