Yesterday the Chinese government suspended Ant Group’s listing on the Shanghai Stock Exchange. It had planned to raise $34.4 billion at a market valuation of around $300 billion. There are potentially several reasons for the Chinese government to be uncomfortable with Ant Group’s IPO. But the big question is why did it let it get so far and then pull the plug. A distinct possibility is that a speech by Ant founder Jack Ma at the Shanghai Bund Conference on the 24th of October was a step too far.
It was a great speech, if somewhat controversial. It ultimately was an impassioned plea for radical global reform. It was also critical of a digital currency created by a research institution rather than the market. And although Ma made no direct reference to the digital yuan, it was clearly created by a research institution. And from the speech, one has to wonder whether Ant was considering its own digital currency (see later).
While the talk was understandably biased, it also might have stated some uncomfortable truths. Ma was more critical of the Bank for International Settlements (BIS) than China. And likened today’s banks to pawnshops, and pretty much said China’s banks are outdated. He criticized concerns over systemic risks saying that China lacks the ‘system’ in systemic. Ma said the Basel Agreement targets the disease of the elderly, Alzheimer’s specifically, and referred to Europe as the elderly. We’ll come back to the speech, but first let’s explore China’s concerns about the IPO.
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