It looks like investors in China have a new goldmine as they continue to pour into newly-launched mutual funds as they target the upcoming initial public offering from Ant Group. This further underscores the strong demand for technology shares in a period when Chinese tech firms face increasing scrutiny by the United States.
The fintech arm of the Alibaba Group, Ant Group, has announced plans to raise up to $35 billion in a dual listing in Hong Kong and Shanghai's STAR Market. The listing is expected to take place in October and could easily become the world's largest IPO.
Two of the newly launched funds on Friday have also given Chinese retail investors access to strategic stakes in Ant's IPO, having already reached their fundraising target and putting a stop to the acceptance of new investments. The five funds targeta combined 60 billion Yuan, approximately $8.80 billion, with each fund set to raise up to 12 billion Yuan over a two-week subscription period.
Early interests have shown that the appetite for Chinese tech shares remains strong, even with the corrections in the stock market. The signs are also coming amidst the crackdown by the United States on Chinese tech firms on national security grounds.
According to the E Fund Management Co, its fund reached its target on the day of the launch. Penghua Fund Management Co on the other hand said that investor subscription exceeded its target on Saturday.
The other three funds that were launched on Friday, to be managed by China Asset Management Co (ChinaAMC), China Universal Asset Management, and ZhongOu Asset Management Co are expected to be sold out in the new week.
Retail investors could also buy into the five funds directly or through Ant's online payment platform Alipay. The funds will subsequently utilize about 10% of the money to purchase Ant shares. A recent advertisement on Alipay promoting the new funds attracted the attention of more than six million retail investors, according to data from Alipay.
But some were reluctant to become strategic investors in Ant due to the 18-month commitment entailed.
“It's ok to subscribe to new shares of Ant, but we dare not hold the stock for 18 months given the uncertainties brought by a second wave of coronavirus infections globally," said Zhang Chengyu, vice general manager of Beijing-based ShijiHongfan Asset Management Co.
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