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Stock market madness in China: small investors offer 3 trillion dollars for shares in Ant Group

2020-10-30T20:32:54.601Z


The financial services company's mega IPO triggered a frenzy in China. In Shanghai and Hong Kong, private investors want to buy 800 times more shares than are intended for them. Often on credit.


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Place of longing

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Ant shares are to be traded

on the

Shanghai

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exchange in

the coming week

Photo: ALEX PLAVEVSKI / EPA-EFE / Shutterstock

The IPO of the Chinese financial services provider Ant Group is finally developing into an event of superlatives.

The Chinese mega-fintech, which emerged from the Alibaba group, is known to want to raise 34.4 billion dollars by selling the shares - and thus to launch the largest IPO of all time.

It is now known that there has also been an unprecedented run of private investors on the shares.

In total, investors are said to have placed bids for a staggering 3 trillion dollars.

The total value of the deals equals the UK's gross domestic product and underscores how Ant is using the popularity of its Alipay payment application to stage the IPO despite the market uncertainty leading up to the US elections and amid the emerging corona crisis.

In total, Ant wanted to sell 1.67 billion shares.

The shares are said to be split fairly evenly between the Shanghai and Hong Kong stock exchanges.

The price had already been set on Monday - and a total of four percent of the shares should be able to buy small investors.

Small investors in the two markets - from taxi drivers to students to young professionals - are now apparently using their savings and borrowing large amounts from banks and brokers for an investment opportunity that is viewed by many as unique, the news agency quoted Reuters sources the financial sector.

In Shanghai, bids for around 19 trillion yuan ($ 2.8 trillion) were received from retail investors, documents submitted to the exchange show.

That corresponds to about 872 times what was planned for shares.

The Hong Kong tranche received bids of HK $ 1.3 trillion ($ 168 billion) - 389 times the number of shares on offer, people aware of the matter said Friday.

The unprecedented frenzy is aided by massive lending by financial institutions in mainland China and Hong Kong.

Some banks in Hong Kong even offered 20 times the leverage at rates between 0.4 and 0.5 percent for a period of about ten days, according to banking sources.

Hangzhou-based Ant decided to exercise what is known as a greenshoe option to increase its share offering by 15 percent.

It now sells a total of 1.92 billion shares on the STAR market, as Ant has deposited with the Shanghai Stock Exchange.

The excitement of retail investors could lead to more shares being allotted to them than expected, Ant said. The shares are expected to start trading in Hong Kong and Shanghai on November 5, a few days after the US election .

Observers fear that this could exacerbate the expected market fluctuations.

lhy / Reuters

Source: spiegel

All news articles on 2020-10-30

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