Ant takes no chances with election

Editorial | Mary Ma 23 Oct 2020

That the public offerings of Alibaba-affiliated fintech company Ant Group in Hong Kong and Shanghai are due to be completed on the eve of the US presidential election carries a significance that belies the name of the company.

Ant's offering here opens on Tuesday after the public holiday. Retail investors will have until Friday to subscribe and the stock will start trading on November 6, just three days after a US election that pits incumbent Donald Trump against former vice-president Joe Biden.

This Ant has a valuation not to be scoffed at. If it was valued at US$200 billion in July, its size has more than doubled in the space of three months - as far as its book value is concerned. Of course, in the financial sector, it isn't uncommon to elevate a valuation steadily to produce a wow effect.

A worthwhile question may be whether Ant is worth its gigantic valuation or not.

The retort to that can only be that it's a stupid question to raise when major players are piling up huge warchests to bet on it, opting to ignore Trump administration's threat to place Ant on Washington's hostile watch list.

If even geopolitical conflicts won't stop the frenzy, would its leapfrogging price-to-earning ratio? You can't be serious.

It has been suggested that the market is poised to peak following the Ant listing, which is set to be the world's largest so far, since there won't be another listing of this size to follow in the foreseeable future.

At best, such a view is more speculative than substantiated.

The timing of Ant's launch couldn't have been randomly selected, with the US vote on November 3 clearly in mind.

Prior to the announcement yesterday, obstacles such as mainland securities regulator's vetting of the group's application, Trump's warnings against US funds investing in Chinese companies were blamed for a delay in Ant's dual listing.

And even its management publicly claimed they didn't have a timetable.

These were, however, all smokescreens, if not utter nonsense.

The bankers assisting in Ant's launch in exchange for exorbitant commissions understand US politics better than the rest of us. November 3 is a date riddled with uncertainties although most polls still point to a Biden lead over Trump.

In some states, Biden's lead has narrowed, however, since his son Hunter's laptop scandal.

Even if Biden wins the popular vote, he may lose in the electoral college as Hillary Clinton did in 2016. Or if he wins both, Trump may still challenge the outcome and this could mean a wait and uncertainty in US politics.

In the final analysis, the public offering has to take place before November 3, not after.

Locally, tons of capital will be locked up next week. If the election outcome is contested by Trump, uncertainty will continue to cloud the market. That's the risk investors must take.

And the investors seem to have made up their minds already.

For successive interventions by the Hong Kong Monetary Authority in releasing Hong Kong dollars into the market show that capital has been flowing into the SAR.

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