Investors left scrambled for answers after China suspended Ant Group’s $37 billion stock market listing on Tuesday in a dramatic move.
Shanghai stock exchange suspended the listing after the meeting of the Ant Group founder Jack Ma and top executive with Chinese financial regulators.
Ant’s Executive Chairman Eric Jing and Chief Executive Simon Hu were called by Regulators on Monday to inform them that the company’s online lending businesswould face tighter government enquiry.
The Chinese government fear that by using micro lenders or third-party technology platforms, like Ant for underwriting consumer loans can increase the defaults and can degrade asset quality in the current tough time.
The CEO of GEO SecuritiesFrancis Lun said that the Communist Party has shown its power to Jack Ma which has changed the deal of the century in to shock of the century.
The move was felt across the markets and Alibaba group loss $76 billion in U.S. tradingmore than double the amount Ant was going to raise in its listing.
The Ant Group raised $37 billion and was ready to go public on Thursday in Shanghai and Hong Kong. Ant apologized to its investors on Tuesday in a separate statement for any inconvenience caused by this development and said that they will properly handle the matters in accordance with applicable regulations of the two stock exchanges. The group said that it will release further details about suspension as soon as possible.
The senior associate at advisory firm Kapronasia, Alex Sirakov said that the Ant suspension can be taken as a clear political message warning everyone that this is a highly regulated economy.
Alibaba group express his support for the Ant group while other co-sponsors CICC and China Securities Co did not issue any statement yet.