Read on Twitter
1) After considering the Ant Group IPO halt for a while, this is my current perspective.
The convo currently has reduced the way in which the IPO was halt to being the reason for why it was halted.
These are two topics. Related sure, but different issues.
The convo currently has reduced the way in which the IPO was halt to being the reason for why it was halted.
These are two topics. Related sure, but different issues.
2) On the reason why regulators halted the IPO. For me, the crux of the issue is how to manage systemic risk under leverage.
Basel III tries to styme finacial systems against systemic risk through required capital holdings. JMa was famously not a fan.
Basel III tries to styme finacial systems against systemic risk through required capital holdings. JMa was famously not a fan.
3) China didn't suffer too much from the '09 financial crisis, because it wasn't a credit society then. This picture has changed in the past decade, with Ant being the biggest enablers in the credit system with their Hubei and Jubei products.
4) And while Ant only spends 2% of their own capital in their credit products (outsourcing the remaining 98% capital to third party banks). They make it easier than ever to get access to consumer credit with their big-data enabled credit models.
5) These models haven't been through a full business cycle yet. Ant acknowleges as such in the prospectus. It certainly doesn't build as much confidence since systemic risk are tied to black swan events which are not captured in most data distribution.
6) CN regulators obvious think systemic risk is a big issue. During JMa's Bund Summit speak, other regulators also spoke, big wigs made statements that though there are new financial technologies, they do not negate the fact that they are still financial offerings.
7) Which means they should still be subjected to the same regulations that affect financial entities.
From a regulatory perspective, the best way to reduce systemic risk under leverage is probably to reduce the impact of leverage. Aka reduce leverage.
From a regulatory perspective, the best way to reduce systemic risk under leverage is probably to reduce the impact of leverage. Aka reduce leverage.
8) The new regulations requires Ant to have more skin in the game and less capital to put to work in the wider markets. This is going was never going to go down well with Ant.
9) As others have pointed out, major regulation policies like these would generally require industry commentary before getting public commentary. Ant + JMa would have known and been consulted on these topics way before the Bund Summit.
10) What the public had saw was only JMa's speech that day. Then the talk with regulators. Then the halt. It's easy to draw a line when you see three points.
But I (and a lot of CN commentators) think the speech was a last ditch effort to court public opinion.
But I (and a lot of CN commentators) think the speech was a last ditch effort to court public opinion.
11) And sway the public before the regulations come out for public commentary.
It just added more fuel to the fire and gave indication that Ant thought themselves above regulations. Not sure what the fallout would be if Bezos ever announced he was above regulations.
It just added more fuel to the fire and gave indication that Ant thought themselves above regulations. Not sure what the fallout would be if Bezos ever announced he was above regulations.
12) While regulators have to be responsible for the financial wellbeing of an entire country. Ant's responsibilities (esp once it goes public) would only be to its shareholders.
JMa's speech gave indication for where his loyalties lie. More for profits and less for country.
JMa's speech gave indication for where his loyalties lie. More for profits and less for country.
