Ant Group’s plan for listing shows the US is not the only option

A high tide lifts all boats. Ant Group has announced it will seek a dual initial public offering in Hong Kong and Shanghai, bypassing New York.

Depending on market conditions, the highly anticipated IPO of China’s largest “fintech” group may become one of the largest share sales of all time.

Thanks to the news, Hong Kong Exchanges and Clearing soared the most in one day in five years to become the world’s largest exchange operator by market capitalisation, while local and mainland stocks listed on the new Hang Seng Tech Index shot up.

The dual listing comes at an extremely sensitive time, as the global economy struggles amid the Covid-19 pandemic and rising China-US rivalry. The increasingly bitter spat between Washington and Beijing has put pressure on Chinese companies listed in the US to “go home” and others to seek listings outside the US.

Alibaba, which owns 33 per cent of Ant, is the owner of the South China Morning Post.

At a time when Hong Kong is facing intense criticism over the newly introduced national security law and an unprecedented economic downturn, the IPO will be a great shot in the arm to boost local market sentiment.

It signals that despite all its recent troubles, the city remains the region’s key financial centre and the preferred choice of mainland companies to raise capital.

It will be hard to overstate the significance of Ant Group’s dual listing. It shows that regulators on both sides of the border are committed to overhauling rules to make dual listings relatively pain-free.

Why Jack Ma’s Ant Group is skipping New York for Shanghai and Hong Kong

This means removing some of the complexities involved in selling shares across capital markets and being subjected to different regulatory and accounting regimes, in addition to the logistics of having to maintain two capital pools.

It is also a big win for Shanghai’s new Nasdaq-like Star Market, which has rightly claimed the country’s “national champion” tech companies as its own. But Ant’s listing also gives credit to the HKEX and Securities and Futures Commission, as they represent the models of international best practice for China’s capital market.

Ant, which operates the Alipay online payment platform for the world’s largest e-commerce company, is still working out the size and timing of the IPO, but analysts are already valuing the share sale of the company at more than US$200 billion.

The expected IPO success will set a powerful example for other US-listed Chinese tech companies such as Baidu – as well as the unlisted ones such as ByteDance, the parent of app sensation TikTok and Didi Chuxing, the ride-hailing company – to follow.

It will show that dual-listing in China is entirely doable and relatively painless, a far more attractive prospect than being exposed to hostile regulators and politicians in the United States.