Prior to November there was big excitement with the world’s largest IPO in Shanghai and Hong Kong with the expected IPO of Ant Group. The company is a financial technology firm founded by Jack Ma who became a billionaire with the number one shopping company of Alibaba. In China instead of Amazon people use Alibaba. The issue is whether the financial tech company should be treated as a tech company or a regulated financial institution such as banks.

In an article by Julie Zhu, Meg Shen and Greg Roumeliotis of Reuters, according to to Francis Lun, chief executive of GEO Securities, The Communist Party has shown the tycoons who is boss. Jack Ma maybe the richest man in the world, but that does not mean a thing. This has gone from the deal of the century to the shock of the century.

To revive its listings, Ant is trying to establish if it needs to disclose more information to the Shanghai exchange about its relationship with regulators or if the exchange expects Ant to resolve on its issues with regulators before going ahead.

Ant Group is a financial technology firm which people use to bank, invest and make loans. The Chinses regulators are worried about underwriting loans amid fears of rising defaults, who is responsible? Ant originates demand from retail consumers and small businesses and passes that on to about 100 banks for underwriting, earning fees from the lenders with minimal risk to its own balance sheet.

Ant’s consumer lending was 1.7 billion yuan (or $254 billion) at the end of June or 21% of all short term consumer loans issued by Chinese deposit-taking institutions. Only 2% of its loans that it had facilitated were on the balance sheet.

Under draft rules published by China’s central bank and banking regulators. small on line lenders must provide at least 30% of any loan they fund jointly with banks.

The reporters interviewed a banker from Hong Kong with close ties to other Chinese fintechs said the the new rules were tailored made for Ant. The banker said Ant may have to split into a number of companies – payments, mico-lending, and wealth management.

Linking to dividend paying stocks, this was a huge blow to Ant Group because the IPO has taken a number of years and had the blessings of the government till in did not. One expects companies in the marketplace for a number of years would have built up the relationships with regulators and government to ensure they have rulings before the action. There are always competing interests and and always other methods to do things including for politicians doing nothing. In business you wish to do something, but it is important to understand how government can and does affect your investment.

There are more questions than answers, till the next time – to raising questions.