This is a First: The Biggest IPO in History Is NOT Happening on Wall Street… but, in China

China Wants to Dominate Global Finance–Would Joe Biden Allow It?

Jack Ma, the founder of Alibaba and the most famous entrepreneur in China, blasted international finance rules (known as the Basel Accords) saying China needs to break free and chart its own path.

According to Ma, “The Basel Accords are like an old people’s club…we can’t use yesterday’s methods to regulate the future.”

Mr. Ma is suggesting the need for China to create its own sophisticated financial markets –a system to rival that of New York’s legendary and enormously powerful Wall Street.

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Filing for an IPO in Shanghai and Hong Kong, instead of New York, is a big deal. Speaking with bankers and regulators at the “Bund Summitt” in Shanghai over the weekend, Ma admitted that the Ant Group IPO was a “miracle,” adding, “We didn’t dare to think about it five years ago, or even three years ago. But the miracle just happened.”

On the eve of his company’s debut, the Ant Group’s expected “biggest IPO in history” analysts anticipate a valuation between $350 billion and $450 billion. But, having to follow Basel Accord rules has left Ma questioning whether the international rules covering public markets are “suitable for the Chinese economy.” Ant is the operator of China’s largest mobile payment app Alipay…and it applied for a dual listing in Hong Kong and Shanghai’s Star Market in August.

Alipay has become a hot payments business and is gathering real-time data on customers — something that intelligence and security experts warn could become problematic. Nonetheless, monthly active users grew to 731 million on September 30th, up from 711 million as of June 30th.

Ma also criticized traditional Western banks for having been designed for an age of industrial development, but said, in the future banks would need to be an inclusive, sustainable and green system that used new technologies such as big data, cloud computing as well as blockchain. (The technology behind bitcoin.)

The U.S. government should be paying attention to all of this right now — and insist on international rules IF international investors chose to invest in these vehicles. The Chinese are ambitious – not just in the manufacturing sector -but also in the financial services arena. Judging by Ma’s comments, he would like to see China surpass the U.S. in a sector we have long been known for– our superb, liquid, efficient and effective financial markets.

 

 

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