Alibaba Pumps And Dumps After China Denies Bloomberg Report Of Ant IPO Revival
Update (0740ET): What a rollercoaster so far this morning. After Bloomberg first reported that Chinese regulators were considering reviving the infamous collapsed Ant Group IPO, a short time later, China regulators denied it, sending Alibaba’s US-listed shares lower. Now Reuters repeats Bloomberg’s story, sending shares higher.
And now Reuters refuting China’s refutation of Bloomberg
CHINA CENTRAL LEADERSHIP HAS GIVEN INITIAL NOD TO ANT GROUP TO REVIVE IPO PLANS IN SHANGHAI AND HONG KONG – SOURCES
ANT AIMS TO FILE PRELIMINARY IPO PROSPECTUS AS SOON AS NEXT MONTH
— zerohedge (@zerohedge) June 9, 2022
So what’s next? Will Chinese regulators refute the Reuters report?
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Alibaba’s US-listed shares pumped premarket (initially) and then dumped, as first Bloomberg reported that Chinese regulators were considering reviving the infamous collapsed Ant Group IPO, news which sent US-listed Chinese stocks higher as it was seen as marking a critical turning point in the regulatory crackdown spanning more than a year and a half. However, just over an hour later, the party ended as quickly as it had begun and all gains reversed after China Securities Regulatory Commission said it was not conducting such a review and research work regarding Ant IPO revival, but it supports eligible platform companies to list overseas, according to a statement from the securities regulator.
While it has since been refuted, although China refuting something usually means it’s about to happen, Bloomberg initially reported that China Securities Regulatory Commission was set to review Ant Group’s share sale plan, and that regulators are in the final stages of issuing Ant a license that would allow an IPO and make the fintech regulated more like a bank.
The move would be highly symbolic: if regulators had allowed Ant to proceed with the share sale, it would indicate the worst of China’s tech crackdowns is be over. For some context, regulators unexpectedly pulled Ant’s IPO in November 2020, which was the beginning of the regulatory overhaul of the country’s internet sector. The crackdown led to an exodus of international investors as hundreds of billions, if not more than a trillion dollars in market capitalization, were wiped from Chinese tech companies.
Alibaba, which owns about a third of Ant, saw shares gain as much as 2% premarket, following a massive move higher on Wednesday of 14%. However, following the Chinese denial, all gains were promptly lost.
The easing of curbs follows Monday’s WSJ report that regulators are preparing to wrap up their investigation into another iconic Chinese tech company, Didi Global. Also, China approved another batch of video games after slowing down licenses last year to reduce gaming addiction.
And while we wait for a denial of the denial, here’s what some analysts are thinking this morning (courtesy of Bloomberg):
Global CIO Office (Gary Dugan)
“We were only saying a few days ago that if Ant was rehabilitated it would mark a major positive. This, in a sense, was where the trouble started”
“This would be sufficient” to mark the bottom
“If true, it would be very good news and a major potential turning point for the China tech sector and broader Chinese markets”
It would suggest a major shift of government policy that is pro markets
Kamet Capital Partners (Kerry Goh)
“We now firmly believe that the worst is past us for China tech in particular from a regulatory point of view, but the impact from the economic slowdown, we don’t know yet”
The high frequency of positive news this week seems very coordinated and gives the clear signal that the regulatory stresses of the sector are over
The next thing China stock traders would like to see is the property-sector overhang removed for the economy
UOB Kay Hian (Steven Leung)
The report could be “big good news” to market
It “may be considered as the official end of regulatory risk” as the crackdown started with the freezing of Ant’s IPO
Bloomberg Intelligence (Marvin Chen)
It is a sign that regulators are following through on their pledge to end the crackdown on tech platforms, which will continue to improve sentiment on the sector
“Potential revival of the Ant IPO may also help support financial markets in the region as fund-raising activity has dried up this year”
Thu, 06/09/2022 – 07:11