Washington in move to stamp on AntTop News | Reuters and Avery Chen 16 Oct 2020
The US State Department is asking the Trump administration to add China's Ant Group to a trade blacklist just as the financial technology firm is slated to go public, Reuters reported citing sources.
But it was unclear when the American agencies and officials responsible for the so-called Entity List would move on a review.
The move comes with anti-Beijing hardliners in the Trump administration seeking to deter US investors from taking part in the initial public offering for Ant, the Alipay payment app.
The dual listing in Hong Kong and Shanghai could be worth a world record US$35 billion (HK$273 billion).
Approval for the IPO has anyway been delayed. On Tuesday, it became known China's securities regulator was probing a potential conflict of interest in Ant's planned listing.
While Ant is currently unavailable in the United States, Trump administration officials supposedly fear Chinese authorities could one day use it to access sensitive US banking data.
A powerful US panel known as the Committee on Foreign Investment also stopped a US$1.2 billion bid by Ant to buy money transfer firm Moneygram in 2018 on the grounds of a national security risk.
Ant, which is backed by Alibaba, refused to comment on the latest turn of events, but it has been emphasized that only 5 percent of its business is outside China.
And foreign ministry spokesman Zhao Lijian said in Beijing yesterday that "China opposes the United States abusing the concept of national security and its national power to oppress foreign countries. This is a bullying practice, the ministry said.
"China will continue taking measures to safeguard the legitimate rights and interests of Chinese companies," it added.
Dickie Wong, executive director of research at Kingston Securities, expects Ant to delay its IPO until after the US presidential election, buying time like TikTok.
Even so, Wong said, the American action is symbolic.
In a worst case, he added, people may not be allowed to use Alipay and Tencent's WeChat Pay in the United States. But that would have minimal impact on Ant's business, which focuses on the domestic market.
The Hong Kong leg of Ant's IPO is being sponsored by Chinese investment bank China International Capital Corp and three US peers - Citigroup, JPMorgan and Morgan Stanley. Another US bank, Goldman Sachs, is also involved, and Credit Suisse is a joint global coordinator.
Wong does not expect Washington to try to ban the US banks from participating in the deal as it would hurt those institutions. And it would be difficult to prevent American investors buying Ant shares, which have big potential.
A spokesman from Ant responded: “We are making steady progress in the regulatory approval processes in Shanghai and Hong Kong. Just like any other A+H IPOs, Ant does not have a definitive timeline for the process. Any speculation on our timeline is unsubstantiated.”