(“Standardize,” “Purify,” “Set on the Right Path”… The pronouncement rings with Orwellian cadences. “The regulator’s punishment of Alibaba Group is a move to standardize the company’s development and set it on the right path, to purify the industry and to forcefully protect fair competition in the market.”.The company was accused of “abusing its market dominance” and, again, “ordered the company to ‘rectify’ its behavior” and “shrink its business.” Still, it was the description of the “sin” that mattered. The dollar amount appeared far smaller than the financial damage from the broken Ant IPO, and some observers dismissed it. In April, a “record” fine of $2.8 Bn was levied against Jack Ma’s flagship, Alibaba – for antitrust violations. “Ant Group’s money market fund has shrunk to a more than four-year low as users shifted their cash in the face of China’s crackdown on Jack Ma’s payments group… Ant was ordered to “actively reduce” size as part of a restructuring deal struck with Chinese authorities last week.”.It is the direct result of Beijing in action. This decline is not (as has been suggested by some) due to “natural” market forces, interest rate shifts, or trends in the Chinese equity markets. Ant’s business was thrown into reverse, shrinking 18% in the first quarter of this year, and down almost 50% from its peak.īeijing's Crackdown on Ant's Money Market Fund Chart by author In just four years, the fund became (briefly) the world’s largest, surpassing the American establishment giants like Fidelity and JP Morgan and “shocking banking executives around the world.” Ant built this fund up by inviting Chinese consumers to hold their spare cash (“leftover treasure” in Chinese) in these accounts.īeijing took note. “Hiving off the treasure trove of data on more than 1 billion people is a key part of Ant’s business overhaul in response to a regulatory crackdown.”Īnt’s Group’s money market fund was perhaps its most amazing and explosive success story.“Ant will also be required to break an “information monopoly” on the vast and detailed consumer data it has collected, the central bank said.”.The tech-intensive analytics generated from this resource have been the basis of Ant’s competitive advantage over the less technologically sophisticated traditional banking sector in making consumer credit decisions. The government also had its eye on one of Ant’s most valuable assets - its data, derived from billions of consumer transactions it processes. That could open a door for big state banks or other types of government-controlled entities to buy into the firm.” “The central bank ordered Ant to form a separate financial holding company that would be subject to the kind of capital requirements applied to banks.Its consumer financing business was set to be restructured, with new “partners.” The WSJ reported that the order book exceeded “the value of all the stocks listed on the exchanges of Germany.”įollowing the IPO fiasco, regulators began to disassemble Ant. Furthermore, for the first time ever, it is set in a city other than New York. The Wall Street Journal called it “a $3 trillion scramble.” The share price on the private market ran up 50% ahead of the effective date, and the offering was said to have been 80 times oversubscribed. The Ant IPO had become – by October 2020 – a true frenzy. The size of the deal itself doesn’t portray the scale of the financial phenomenon. Biggest IPO's of All Time Chart by author
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