What Does Ant Group’s Suspension Mean For Chinese Stocks?

In the midst of a presidential election, the outcome of Ant Group’s suspended IPO could have far-reaching effects on U.S. listed stocks

Nov. 4, 2020

While the U.S. awaits confirmation of who will be taking the Oval Office for the next 4 years, trouble is brewin’ out East after Ant Group’s record-setting initial public offering in Shanghai and Hong Kong was suspended.

The $34.5 billion IPO was called off by the China Securities Regulatory Commission due to:

 “Significant issues such as the changes in financial technology regulatory environment, which may result in the company not meeting the conditions for listing or meeting the information disclosure requirements.”

Though obviously not publicly traded — yet — this still had a massive impact on the market after Alibaba (NYSE: BABA), which owns a 33% stake in the firm, plummeted more than 8%.

There has been no word on any possible rescheduled IPO plans for the Jack Ma-backed company as of yet, but Alibaba has publicly stated that it would support Ant Group through any regulatory hurdles.

Why should U.S. investors care?

Well, if Trump retains his presidency: 

  • He has expressed his desire to delist Chinese-based stocks from U.S. exchanges, which number around 217 as of October and represent a total market cap of $2.2 trillion.
  • As president for 4 more years, Trump will have the time and backing to go after Chinese stocks in the U.S.
  • Yet another Chinese company having regulatory trouble would only add fuel to the argument of delisting Chinese stocks.

Now, regardless of who sits in the White House:

  • Remember Luckin’ Coffee? That wasn’t so long ago, and the fraudulent Chinese answer to Starbucks is fresh on investors’ minds.
  • Remember TikTok? That whole debate is still ongoing, and many still don’t trust them, or Chinese data firms for that matter.
  • Ant Group could be another China problem that investors don’t want.

If your portfolio is heavily influenced by U.S. listed Chinese stocks, you might want to keep an eye on the political landscape.

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.