Ant Group, the operator of the mobile payment service Alipay, declared July 20 that it had started negotiations with concerned departments for a concurrent listing of its shares on the Sci-Tech Innovation Board (STAR) Market in Shanghai and Hong Kong bourse.
As an important affiliate of China's e-commerce giant Alibaba Group based in Hangzhou, the capital city of Zhejiang Province, Ant, which offers services ranging from digital payment to online financing, is reportedly targeting a valuation of more than US$200 billion.
The concurrent listing of a company within the territory of China is an innovative idea. Originally, many Chinese companies preferred their concurrent listings in two different countries, for example, being listed in a Chinese bourse and the New York Stock Exchange or London Stock Exchange at the same time. However, U.S. President Donald Trump's recent threat to delist Chinese companies have deterred and even dampened the desire of Chinese enterprises to be listed abroad.
Shanghai's STAR Market was kicked off just a year ago. The first batch of 25 companies started trading on the NASDAQ-styled board July 22 last year. According to statistics from the Shanghai Stock Exchange, 140 companies had floated shares on the board by July 22, 2020, currently with a total market value of more than 2.7 trillion yuan (US$343.2 billion). Ant's decision has demonstrated the attractiveness and competitiveness of the newly sponsored securities market as the first choice of high-quality technology companies in China. If Ant can be successfully listed, many high-tech private companies within China and even foreign enterprises will follow suit to edge into the emerging Chinese market.
Meanwhile, Ant's listing will further consolidate the position of Hong Kong as an important global financial hub. During the past decades, Hong Kong has been one of the most popular locations for share listings of Chinese State-owned and foreign enterprises, once making it the world's leading destination for initial public offerings (IPO). Those companies from all over the world have long been lured to Hong Kong for its function as a global center, a "super-connector" orientation between the Chinese mainland and the outside world, its stable legal system and large sums of institutional investors. However, in recent years, the leading position of Hong Kong in terms of finance has been greatly challenged and even deeply hurt because of various reasons from both inside and outside.
Moreover, Ant's dual listing will enhance the joint force and synergy of three bourses in China. In addition to the two previously mentioned, the other Chinese stock exchange is located in Shenzhen, a coastal city adjacent to Hong Kong. In terms of concurrent listings, China's securities regulator may consider introducing the Shenzhen Stock Exchange as an alternative, thus forming a circle of benign competition among the three bourses.
As we all know, capital markets, including securities, bonds and others, are considered to be barometers of economic development. In order to ensure economic prosperity, the Chinese Government should take concrete measures to stabilize its capital markets and shrug off lingering concerns about escalating Sino-American tensions.
Overprotection does not necessarily lead to economic stability and development. Instead of closing its doors, China must make greater strides in reform and opening up especially amid rising protectionism in some countries, a sluggish global economy and a weakening international market due to the COVID-19 contagion, so as to both fully unleash its domestic demands and better connect with other economies.
It is good to see that China has taken some major steps to further open its financial sector. According to latest news released by the People's Bank of China, the country will embark on an infrastructure connection mechanism between the interbank and exchange bond markets. Qualified investors from either market will be able to trade bonds listed on the other. It is reported that overseas investment institutions can also enjoy the convenience, thus making the onshore bond market more attractive and promoting the internationalization of the Chinese yuan to a new level.
(The author is the editor-in-chief of Shenzhen Daily with a Ph.D. from the Journalism and Communication School of Wuhan University.)