Yahoo Finance Live anchors discuss reports that Chinese financial regulators had plans to revive Ant Group’s IPO.
- We've got three things that you need to know right now. To begin our show here, first and foremost Chinese financial regulators, denying a report from Bloomberg this morning that they had plans to revive billionaire Jack Ma's Ant Group's IPO. Now Ant had originally planned a record $37 billion IPO in Shanghai and Hong Kong in 2020. Chinese regulators halted the deal only a few days before. China's Securities and Regulatory Commission, it did say that it supports eligible platform companies to list overseas.
According to a statement, shares of Alibaba-- you're seeing BABA-- trade lower by about 4% right now, following the news after surging earlier this morning. Now Alibaba actually owns almost one third of Ant, and it's also noteworthy the valuation that Ant had had, even prior to the multiple slashes. I mean, $280 billion private market valuation it had seen at one point. That came down to $78 billion.
And then it's really-- at this point in time, this questioning of when we will see some of these IPOs be reinitiated, especially those in a highly scrutinized and troublesome tech scene in China right now.
- Well, all the-- I almost give it a shrug, because all these companies are still black boxes. Alibaba, Ant Financial. Why not focus on a US company, and putting money to work in a US company that does like-minded things? At least you don't have to worry about the government coming in here and clamping down on companies like this. Now, secondarily, the other read here is if you are inclined to play these China stocks-- they have historically been momentum names, pre-China government cracking down-- perhaps this is the opportunity to look into it, because China's government does seem to be backing off a little bit.
- Why do you play them? Because we're not going to have very much growth here. And you're going to have more growth there.
- Not having much growth in China with these lockdowns. Shanghai, new ones today.
- No, you're still gonna have more growth than you are in the United States, it looks like, especially because that is just pushed off growth. It's not growth that is evaporating.
- There's still an element of trust. Can you trust putting money to work in these needs? I think we've learned over the past year and a half you can't trust.
- But it's also the type of name that you're putting into. If you're Ant Financial, and a group that, in this broader financial services ecosystem, for all of the different policy decisions that are going to be made, that are going to affect banks here in the US, as well as financial institutions in China during this point in time. I think that's where you might hang your hat on the perspective for growth.
But at the same time, it's really more of a question of where might regulators in China not be able to paint that rosy scenario that all of the investors-- if they were to kick the tires on Ant-- be looking for?
- I mean, people are kicking the tires on other Chinese stocks right now. And we should point out, by the way, Alibaba shares turned negative after the regulator came out and said, no, we're not going to allow this specifically for Ant Financial. We might look at other IPOs. They had been hired by what, as much as something like 6%, when we came in this morning? Listen, I'm not going to opine on whether people should buy Chinese stocks. I'm not a fund manager.
- Yeah, we're not picking stocks here.
- I'm not a strategist.
- We're not picking stocks.
- But people have been buying. I'm looking at what people have been doing, not what they should be doing. And if you look at the KWEB-- which is one of the China ETFs, China internet ETFs-- specifically, it's bounced off the bottom, and in fact is up something like 50% from that low that you see on that chart, which is March 14. It is still down a lot over the past year. But we have seen a bounce up off of the lows.
And then if you look at some of the individual stocks and how they've performed over that period of time, you've got big bounce-backs in companies like Pinduoduo or TAL Education. And in particular, the education regulatory crackdown seems to be coming to an end. So it's these signals that the Chinese government is trying to send, that it's coming to an end. Whether there's credibility, Sozz, I guess is another question. But people have been buying these stocks.