Foreign media concerned about the Ant Group listing suspension: strengthen regulatory norms to control financial risks

Ant Group, the world’s largest online financial company, has suspended its listing, sparking widespread media attention abroad. Ant Group has changed the way it deals with money over the past Chinese New York Times reported Thursday. The company’s app, Alipay, has become an essential payment tool for more than 730 million users and a platform for obtaining small loans and buying insurance and investment products. But regulators have been wary of Ant-Man’s rapid growth in some areas.

Reported that the China Banking Regulatory Commission on Monday issued a draft of the interim measures for the management of online micro-credit business, including raising the capital requirements for loans and strengthening controls on cross-provincial loan business. The Shanghai Stock Exchange’s decision to suspend Ant Group’s listing also mentioned that changes in the regulatory environment for fintech could have a significant impact on Ant Group.

The report also cites an article in the Economic Daily, which said it was in the best interests of investors to suspend Ant Group’s listing, noting that “market participants must respect the rules, the rules of awe, and no one can be an exception.” “

The article points out that this development marks a stunning turning point for the Ant Group. Shares in Alibaba Group Holding Ltd., which owns 33 per cent of Ant Group, plunged more than 7 per cent in pre-market trading after the news. Eswar Prasad, a professor of trade policy and economics at Cornell University, said: “This demonstrates the long-standing concern of regulators about the opacity of Ant Financial’s business and its huge impact on China’s payment and financial environment. Martin Jozpia, a researcher at the Peterson Institute for International Economics, said: “Companies should operate within China’s regulatory constraints and political system. The Wall Street Journal reported Thursday that a statement from the Shanghai Stock Exchange said the regulatory interviews, coupled with changes in the regulatory environment for fintech, could result in Ant Group not meeting the conditions for thursday’s listing of the company. The exchange noted that recent developments were significant and that Ant Group had not properly disclosed the material matter to investors. Ant Group announced later in the day that its Hong Kong listing would also be put on hold and plans to return investors’ subscription funds.

China suspended Ant Group’s listing plans on Tuesday, Reuters reported Wednesday. Analysts say Ant Financial has prospered in most cases as a technology platform that is not regulated by the banking industry, thanks to its unique business model and its position as a competitor in China or anywhere else.

The report also noted that Beijing has become uneasy about banks increasingly lending through third-party technology platforms such as microfinance companies or Ant Financial, against the backdrop of rising risks of default and changes in asset quality in the after-effects of the economic crisis. Regulators have come under scrutiny from banks that overuse Ant Financial’s technology platform to make consumer loans as part of a campaign to curb risk in the country’s financial sector.

“As with other financial institutions, it is the right thing to do to regulate companies that are essentially financial institutions, ” said Zhong Daqi, a founding partner at an investment management company in Guangzhou, according to the report. “

In a report on the 4th, Reuters quoted a former senior investment banker and mainland capital market columnist as saying that with the introduction of new online microfinance rules, Ant Group has a responsibility to explain the impact on its business, in the face of the rules, Ant Group should not be given special treatment, this is the registration system IPO system works.

Chinese regulators have told Ant Group not to make an initial public offering until it complies with new capital requirements and other restrictions imposed on Chinese financial groups earlier this month, Bloomberg reported Thursday. People familiar with the matter said Ant Financial would have to make changes, including a capital increase in its lucrative microfinance division, the report said. It is unclear to what extent Ant Financial will overhaul its business to meet all of China’s new rules. People familiar with the matter said the fintech giant would also have to reapply for a license to operate the division nationwide.

Ant Group’s suspension from listing reminds Chinese companies and their investors that they still have to accept the leadership of the party, regardless of who they are, the Financial Times said in a comment thursday. While private groups such as Ant do not pose the same level of potential financial risk as China’s big banks, “they need to be regulated by a more systematic regulatory framework”, says Chen Zhiwu, a finance professor at the University of Hong Kong.