Friday 6 November 2020 7:04 am

DEBATE: Did Chinese regulators have a legitimate reason for halting the IPO of Jack Ma’s Ant Group?

Tim Focas is head of capital markets at Aspectus Group
and Leon Emirali
Leon Emirali is an entrepreneur and adviser. Follow him on Twitter @LeonEmirali

Did Chinese regulators have a legitimate reason for halting the IPO of Jack Ma’s Ant Group?

Tim Focas, head of capital markets at Aspectus Group, says YES.

For any public listing, but in particular one of this magnitude, smart and sound regulation is of paramount importance. It can’t be one rule for one firm looking to go public, and another rule for someone else. From fintech firms to buccaneering entrepreneurs, regulation has to be consistent for everyone.

Regardless of whether this IPO eventually takes place or not, regulatory authorities across the globe need to work together more closely in order to come up with a pragmatic way forward. 

There are important differences in the size and structure of global listings. Some firms run on a sub-national basis, while the big institutions operate across multiple jurisdictions. In some cases, certain criteria for listings can be uniform across the national exchanges, particularly when it comes to the major deals. 

More dialogue between national regulators would allow for greater scope to adjust rules accordingly to accommodate any nuances around IPOs, removing the pitfalls of a one-authority-knows-best approach.

Read more: Sink or float: What’s next for Ant Group after China suspends world’s biggest IPO?

Leon Emirali,  an entrepreneur and adviser, says NO. 

This is China, after all. No doubt the powers-that-be will have cast a worried glance across the Pacific and seen the huge influence wielded by the likes of Bill Gates, Jeff Bezos and Mark Zuckerberg in the US. Beijing will want to avoid the risk of losing even a modicum of power for the ruling party and Xi Jinping. 

Having lived in China for a short period at the beginning of the last decade, I saw up close the innovation, graft and aspiration of Chinese entrepreneurs that propelled the country to economic super-power status. Ten years later, and it’s clear that the state is ready and willing to stamp on the entrepreneurs that got them there. 

This move sets a dangerous precedent that may lead to a substantial “brain drain” that sees Chinese businesspeople choose to set up elsewhere. In the midst of a bitter trade war, China’s decision to halt this IPO looks to be a myopic mistake.

Read more: Alibaba gets post-pandemic revenue boost amid Ant Group float woes

Main image credit: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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