Ant Financial – biggest IPO EVER?!

MARKETS

The price of gold jumped $50 per oz on Wednesday in what appears to be last-minute positioning ahead of Fed Chair Jay Powell’s speech at Jackson Hole. Silver prices also jumped 5%.

The dollar was mostly higher alongside a rise in treasury yields. 10-year US treasury yields rose over 0.7% after July durable goods orders easily topped expectations (11.2% vs. 4.3% expected). The Chinese yuan touched a 7-month high after Chinese officials said they would purchase the most US soybeans ever this year.

The S&P 500 and Nasdaq indices reached new record highs again, led by shares of Salesforce that smashed Wall Street earnings expectations for the second quarter and has been added to the Dow Jones index this week. Chinese shares turned lower in what might have been investors selling positions before the newly announced IPO of Ant Financial.
 

GURU WISDOM

“Investing money is the process of committing resources in a strategic way to accomplish a specific objective.” ― Alan Gotthardt
 

Ant IPO

Ant Financial filed papers to go public on Tuesday with a dual IPO in Shanghai and Hong Kong. The company is targeting a public valuation of $225 billion. A stake sale of 10-15% could be worth $30 billion, which would make it the biggest IPO ever, above Saudi Aramco last year.

Ant was spun out of Alibaba before its own $25 billion IPO, clearly with the intension of making its own IPO later. The main product is Alipay, used for online payments not just on Alibaba platforms but across ecommerce in China. Ant group also owns China’s largest money-market fund – which actually could turn out to be a bigger risk than blessing for new investors because of the regulatory oversight it implies in China.
 

Gold jumps

We have been previewing Fed Chair Powell’s speech all week and it appears gold traders are jumping on the bandwagon. Goldbugs bought a dip to $1900 per oz, carrying the price up above $1950. It appears to be in a specualtion that gold will continue to rise as investors seek a hedge against inflation if Powell does indeed tout a new Fed policy shift towards ‘average inflation targeting’.