Jack Ma’s comments on Chinese banking systems sparked many new issues. The biggest one of them was the suspension of ANT’s listing by the Shanghai Stock exchange. This entire fiasco created a negative impact on the stock market, and Alibaba’s share plunged. Many either Chinese shares in NASDAQ also took a hit, but Alibaba faced the worst for obvious reasons. The company lost over $60 billion market cap after the news surfaced.
Details about Jack Ma’s comments
Jack Ma talked in the Shanghai high profile financial forum about Chinese banks are like pawn shops. He also said its almost impossible for any small business to take a loan from Chinese banks. Since ANT also provides loans and to small business too, Chinese banks are nowhere bringing as much business as ANT is bringing. This might be the reason why ANt group is being targeted and have been delisted.
Fall in Alibaba’s shares
After the delisting, Alibaba’s shares fell by more than 8% and resulted in a loss of $60 billion market share. Had ANT been listed we might have also seen a boost in Alibaba’s share. This is because the demand for shares of the company was reaching around $3 trillion, and the company was also planning to raise around $34 billion for its IPO. ANt would have been evaluated at $300 billion in IPO, which makes it one of the largest companies in the world.
But as the opposite happened, Alibaba that was evaluated at $841 billion a few days back it at $772 billion now. And to understand the gravity of the situation, the entire fiasco resulted in the huge depreciation in just one day.
ANT’s huge market
The company has prospered from Alipay, which was a part of Alibaba and founded in 2004. In 2011, Alibaba acquired a 33% share in the company and transformed it to ANT with a valuation of $60 billion. Considering we have had 9 years since then the company’s value had grown by 5 times considering the value of IPO.
The company had problems with Chinese communist party according to an article by TechCrunch. This might mean that we might not see an IPO after all if the issues aren’t settled. This might mean a huge fall in Alibaba’s prices that just saw a huge depression in one day.
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