- The world's largest I.P.O. plan halted by the Chinese government on its eve.
- Jack Ma's companies become a symbol of blood-sucking capitalism in China.
- Internet users think Jack Ma's future may be jeopardized by his big mouth.
The rumors started at around 8:50 pm. On November 3, first Shanghai Stock Exchange announced the halt of Ant Group’s IPO on November 5, then HK Exchanges and Clearing and Ant Group published the same announcement. In less than one hour, the originally planed world’s largest IPO died on the vine. At $34.5 billion, it could have broken the record set by Saudi Aramco’s $29.4 billion IPO last year. It’s worth noting that the current second largest IPO was set by Alibaba at $25.0 billion. Both Ant Group and Alibaba were founded by Jack Ma, the richest man in China.
Many internet users in China think that Ma has a big mouth that just won’t shut up, which is not a good quality for entrepreneurs in China. In 2013, he used the Tiananmen Square Protests as an example to talk about some crisis Alibaba was facing in an interview with a journalist from HK.
In 2019, he publicly praised and encouraged the “996 working hour system”, i.e., from 9 am to 9 pm, 6 days a week, while the Labor Law of the PRC clearly states a maximum of 44 working hours per week.
Right before the IPO, on October 24, during The Bund Summit 2020 in Shanghai, Ma stated that the Basel Accords “is like an old man club” (that should be abandoned). The Basel Accords is “a set of recommendations for regulations in the banking industry” adopted worldwide to “ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses.”
Huabei, a virtual credit card type of service offered by Ant Group, also triggered controversies online for its recent commercial campaign. In one of the ads, it depicts Wang Shaogang, a 37-year-old contractor, using Huabei to celebrate his daughter’s birthday, titled “even though life is tight, daughter’s birthday should be decent.”
People criticize this ad for cultivating deformed consumer behavior and being a moral hijack. “The campaign encourages poor families to use Huabei, which is basically making them slaves of the capital.”
On November 2, Ma was summoned to a rare meeting with the People’s Bank of China and three other top financial regulators in China. Informants revealed that Ma was told that Ant Group would “face increased scrutiny and be subject to the same restrictions on capital and leverage similar to banks,” instead of a technology company as Ant Group promoted itself during the roadshow.
It’s the biggest black swan that has ever happened in the market, which ignited a chain of consequences. The price of real estate near the headquarters of Ant Group surged aftet the original news of its coming IPO.
Those recent buyers are now stuck in an awkward situation. Millions of people who bought initial issues of Ant Group are now waiting for their refunds, although the commissions they’ve paid are gone forever.
Ant Group announced later that they embrace regulations and will keep innovating. Analysts say if everything goes well, it can come back within six months. But everyone knows, in the end, it depends on the government.