Fintech: President Xi Jinping Stopped The Ant Group’s IPO (And Jack Ma) In Their Tracks
Chinese authorities took exception to Jack Ma’s potshots at the system while he was on stage at a Shanghai forum.
Dow Jones revealed Thursday the inside story on the suspension of the $35 billion IPO of the Ant Group earlier this month. The financial news service said Chinese President Xi Jinping lent ear to irate bureaucrats who took offense at Jack Ma’s critical remarks. It said Xi decided to put brakes on the IPO.
Jack Ma vents his concerns at a financial forum
Dow Jones said there were internal corporate worries at the Ant Group on impending regulatory changes. These frustrations had perhaps led to his criticism of the Chinese financial system at the forum on October 24.
Ma said in his speech, which went viral, that “Chinese finance has no system.”
And therefore, “there is no systemic risk in China’s financial system.”
In more direct remarks, he slammed Chinese regulators saying they tended to focus only on risks at the cost of development. At the time, attendees at the forum included luminaries such as China’s Vice President Wang Qishan, central bank governor Yi Gang and some senior state-bank executives.
Ma did not spare Chinese banks even though they backstopped the bulk of the Ant Group’s lending business; he said they harbored a “pawn shop mentality” that hurt entrepreneurs.
In some avoidable chest-thumping, he went so far as to say that the Ant Group’s IPO, which planned to list in Shanghai and Hong Kong, was “a miracle,” considering it was not taking place in New York.
Chinese bureaucrats up in arms
Chinese regulators did not take kindly to the speech, more so because it attracted global attention and earned plaudits for Ma’s courage to speak out.
It also offered the ideal opening for those in Beijing in favor of tighter regulation of the financial sector.
These grievances probably carried up to President Xi himself, who decided that enough was enough.
Things moved quickly after Xi decided to rein in the financial sector, Jack Ma and the Ant Group IPO.
Quick regulation, swift castigation
According to Dow Jones, which quoted government officials familiar with what happened, financial regulators and Mr. Liu, the President’s right-hand economic adviser, had a meeting on October 31. They decided on the modus operandi “to take Ma to task.”
This was followed by a decision at the Financial Stability and Development Committee to strictly regulate all financial activities in an evenhanded manner.
Long pending regulation drafts were polished up and made even more stringent now that Xi had given the go-ahead. Recall that the China Securities Regulatory Commission had already cleared the Ant Groups’ massive IPO.
The revised rules were published on November 2, timing with a meeting at which Jack Ma and his senior executives were called in and likely read the riot act.
With the rules of the game changed, the Shanghai stock exchange found cause to suspend the IPO of the Ant Group.
Feature image of Jack Ma: Wikimedia Commons
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