Control technology and finance and one controls the future. huawei and bytedance are some of the key chinese tech companies that have suffered setbacks from us restrictions. when it comes to chinas financial sector, restrictions on ant group, the alibaba fintech affiliate not the banks would cause the greatest damage.

Reports that the trump administration is exploring national security related restrictions on the digital payment platforms of ant group and tencent should not come as a surprise. again, restrictions on doing business with ant would hurt us companies. americas vanguard has already set up an investment advisory partnership there with ant.

More pressing, how will this looming threat affect ants $35bn hong kong and shanghai ipo, which should start taking subscriptions in the next couple of weeks? expected to be the worlds largest listing, bankers hope for a market valuation of more than $250bn more than many global banks. that would put ant on about 31 times this years expected earnings, much cheaper than visa, mastercard or paypal.

However, a saturated local digital payment market, of which ant has a 55 per cent share, could test even that valuation. growing competition from nearly 10 rivals, of which tencent is the largest, endangers ants fat net profit margins of more than 30 per cent.

As a result overseas markets, especially the us where digital payment use is growing, are crucial for ants growth. more us retail stores from neiman marcus to walgreens are taking alipay, alibabas online payment service. becoming a trump administration target complicates the outlook. that would partly explain its lower earnings multiple.

For now ants future stays at home. its revenues are 95 per cent from china. most of alipays 1bn users are there. it has diversified into a comprehensive financial services provider including into insurance and consumer loans. it thus faces less of a threat from us sanctions, as has huawei. but any hope of closing the earnings valuation discount with its us peers will probably have to wait.

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