The US president has decided to put off blacklisting Ant Group after a phone call between a senior US official and an Ant executive, Reuters reported.
Why it matters: The US State Department had reportedly submitted a proposal to the White House to blacklist the fintech giant last month, citing security issues. The move would have cut it off from US capital ahead of what was expected to be a blockbuster stock market debut.
- Three sources said that US President Donald Trump decided against the move on concerns that it was too precarious ahead of the election.
Details: In a phone call, Alibaba President Michael Evans convinced US Commerce Secretary Wilbur Ross to reject the State Department’s proposal, the Reuters sources said.
- The Commerce Secretary feared that blacklisting Ant would antagonize Wall Street close to the election, potentially bringing a lawsuit or sending markets on a downward spiral, the report said
- Another source said that Wilbur Ross decided that Alibaba is already scrutinized because its e-commerce app, Taobao, is on the notorious markets list for selling counterfeit goods. Ross’s decision was not affected by the phone call or worries over Wall Street, the source said.
Context: On Tuesday evening, Chinese regulators suspended Ant Group’s Shanghai listing. The company consequently halted its Hong Kong listing.
- Experts TechNode spoke with agreed that a recent speech in Shanghai tipped Chinese authorities over the edge.
- China’s financial regulators have been working to de-risk the sector and increase oversight of fintech firms since 2017.
- Ma’s speech stepped on the wrong toes, and he was summoned to Beijing for a “regulatory talk” with regulators on Monday. The contents of that meeting are unknown, but the Shanghai Stock Exchange suspended the Ant Group listing the next day.
- The Ant Group IPO was set to be the biggest of all time at $35 billion.