HONG KONG • Mom-and-pop investors who put in bids worth a record US$3 trillion (S$4.1 trillion) in China’s Ant Group were stunned after regulators abruptly suspended what would have been the world’s largest stock market debut.
China blocked the fintech giant’s US$37 billion listing on Tuesday, thwarting its debut in Hong Kong and Shanghai and dealing a blow to the company founded by Alibaba’s billionaire co-founder Jack Ma.
Retail investors in the two markets – from taxi drivers to students to young professionals – used their savings and borrowed heavily from banks and brokerages for what many saw as a once-in-a-lifetime investment opportunity.
“I feel like I made a very wrong decision,” said 21-year-old Hong Kong resident and Cambridge student Vincent Tse, who applied for 2,000 shares worth around HK$160,000 (S$28,000), a sum he earned doing a part-time job.
“This situation really reveals a deep problem in the Chinese market and shows a lack of experience in holding such a large (initial public offering),” he said, adding that he will no longer invest in Ant and will instead reinvest in US, European or Japanese stock markets.
In China, investors cited the changing business environment as a key factor weighing on Ant’s future development, with some saying that they would still be keen to invest.
“I’d probably invest again just because of the sheer size of the market share Ant Financial has,” said a 21-year-old student investor in Beijing who goes by the name Clementine.
The unprecedented retail frenzy for Ant’s shares was backed by a massive amount of margin lending by financial institutions in mainland China and in Hong Kong, with brokerages in Hong Kong lending billions of dollars.
Some banks in Hong Kong offered as much as 30 times leverage at interest rates of between 0.4 per cent and 0.5 per cent for a period of around 10 days, banking industry sources have said.
Ant said yesterday that it would refund the application money for the Hong Kong leg of the offering without interest over the next few days. Several Hong Kong brokers said they would waive handling fees and interest rates on margin loans for investors who had subscribed for Ant shares.
Major lenders HSBC and BOC Hong Kong Holdings did not comment. The brokerages included Tencent-backed Futu and Bright Smart Securities, an established broker that lent HK$47 billion on margin.
Mr Billy Ng, a property manager in his 40s, subscribed for 20,000 shares on margin financing. As his bank offered a low interest of 0.48 per cent, he had to pay only HK$1,400 in interest versus around HK$6,000 normally.
“It’s a joke on the Chinese stock exchange. If Ant lists again, I’m not sure I’ll subscribe again,” said a 37-year-old secretary, adding that she had been allotted 50 of the 350 shares that she applied for.
REUTERS
