How to buy Ant Group stock in Canada

Chinese fintech giant, Ant Group — formerly Ant Financial — operates Alipay, the world’s largest digital payments platform. As it attempts to go public in one of the world’s largest IPOs, here’s what Canadian investors need to know about buying in.

Ant Group is aiming to be listed on the Shanghai Stock Exchange (SSE), which is based in China. So, if you want to buy into Ant Group, you’ll need to use a brokerage that provides access to international stocks.

Not all Canadian trading platforms offer access to Chinese IPOs. Some platforms don’t offer access to international investments at all or only provide access to a limited range of investment opportunities.

In this guide, we’ll walk through what you need to know about buying Ant Group stock from Canada.

Note: all dollar amounts on this page are in US dollars unless otherwise stated.

What we know about the Ant Financial IPO

Hangzhou-headquartered Ant Group planned to go public through a parallel listing on Hong Kong and Shanghai stock exchanges. This Alibaba affiliate intended to raise as much as $34.5 billion through its dual-listing. If successful, the listing would break world records for the largest IPO to date. It was the first time a listing of its size was priced outside New York City.

Ant Group planned to evenly split its offerings between the two exchanges, with up to 1.67 billion shares up for grabs on each exchange, accounting for 11% of total outstanding shares. The New York Times suggests Ant Group could be worth as much as $310 billion. This valuation puts it on par with JPMorgan Chase — not only the biggest bank in the US but one of the largest financial institutions in the world.

The projected price for Ant Group’s Shanghai stock is 68.8 yuan, or $10.26, while its Hong Kong stock is expected to launch at 80 Hong Kong dollars, or $10.32. Shares were expected to go live on their respective exchanges on November 5 but the listing has since been canceled.

In the days leading up to its release, institutional investors vying for a slice of Ant Group were bidding as high as 120 Hong Kong dollars, or $15.50, per share in gray-market trading. This constitutes a 50% premium on the listing price and served as an indication of how high the demand was for Ant Group shares.

China suspends Ant Group’s listing

On November 2, 2020, Jack Ma, Ant Group’s billionaire co-founder, was asked to attend a meeting with the China Securities Regulatory Commission and the State Administration of Foreign Exchange. While the exact details of the meeting remain under wraps, multiple reports suggest that the meeting was called to serve Ant Group a regulatory warning. Ma was informed that Ant Group would need to face greater scrutiny and restrictions on its capital — similar to those imposed on other financial institutions.

On November 3, the Shanghai Stock Exchange announced that it plans to suspend Ant Group’s IPO on its exchange, just days ahead of its November 5 release — a crippling blow for what was to be the world’s biggest IPO. Following its Shanghai suspension, Ant Group elected to hold off on its Hong Kong release until it could resolve its regulatory issues.

While it’s still not entirely clear why Ant Group’s Shanghai listing was suspended, The Wall Street Journal reported on Nov 12 that China’s President Xi Jinping was personally responsible for Ant Group’s IPO suspension — potentially in response to Jack Ma’s open criticism of the country’s slow and risk-averse banking industry just weeks prior. Analysts also suggest the regulatory move was a response to Ma’s push for Ant Group to be treated as a tech company instead of a financial institution.

To amend its listing, Ant Group needs to resolve its regulatory issues and meet listing conditions for information disclosure requirements.

Following the IPO’s suspension, Alibaba — which holds 33% of Ant Group — saw its Hong Kong and NYSE shares drop by 7% and 8% respectively.

Ant Group has apologized to investors and pledges to refund the money it has collected. Analysts believe the delay may slash Ant Group’s value by up to $140 billion.

We’ll update this page as more information becomes available.

Will I be able to buy Ant Group shares from Canada?

If and when Ant Group shares become available, you won’t be able to buy them on a Canadian stock exchange like the TSX or CSE. However, you will be able to buy Ant Group stock using a Canadian-based brokerage that offers access to companies listed on Chinese stock exchanges. Specifically, you’ll need a brokerage that provides access to the Shanghai Stock Exchange (SSE) in China, the exchange on which Ant Group shares are traded.

The process of buying stocks in a a foreign company while living in Canada is the same as buying stocks in a Canadian company. You buy and sell using your online trading account or through an investment broker who handles international stocks.

How to invest in international shares from Canada

How to invest in Ant Group from Canada

Although Ant Group’s stock will only be available on Chinese exchanges, Canadian investors can still buy shares. In fact, there are 3 ways Canadian investors can invest in Ant Group.

1. Use an international brokerage account

Many Canadian brokerages only offer access to Canadian stock exchanges like the TSX. If you plan to buy Ant Group shares, you’ll need an international brokerage account that allows you to buy and sell shares on overseas markets. But, before you open an account, make sure you review your broker’s commissions, exchange rates and potential taxes. Take a look at our guide on opening a stock trading account to learn more.

Note: The dollar amounts in the table below are in Canadian dollars.

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2. Buy Alibaba shares

Although it’s a less direct investment than purchasing Ant Group stocks outright, another option is for investors to back its parent company, Alibaba. Alibaba trades on the New York Stock Exchange under the ticker symbol BABA.

Get more detailed information and learn how to buy BABA stock

3. Buy ETFs

You can also indirectly add Ant Group stocks to your portfolio by investing in exchange-traded funds (ETFs) that track the stock. Once the stock hits the market, keep an eye out for ETFs that add Ant shares to their overall holdings. By purchasing these ETFs, you’ll gain some exposure to Ant Group’s stock.

The following ETFs trade in Canada and already invest heavily in Chinese stocks, so they may be worth watching once Ant shares go live:

• Horizons China High Dividend Yield Index ETF (HCN.TO)
• iShares China Index ETF (TSX: XCH)
• BMO China Equity Index ETF (TSX: ZCH)
• CI ICBCCS S&P China 500 Index ETF Non-Hedged (CHNA-B.TO)

You can buy ETFs from a domestic brokerage account.

Ant Financial’s balance sheet

Ant Group is a subsidiary of Alibaba Group and was formed in 2014 to manage Alipay — a digital payments platform with over 711 million active users.

For the 6 months ended in June 2020, Ant reported revenue of 72.5 billion yuan — or $10.5 billion. Profits over the same time period were 21.9 billion yuan — or $3.2 billion. These figures put Ant Group’s revenue up 38% from the same period in 2019 — a promising trend for interested investors.

Ant reports that its payment app, Alipay, processed 118 trillion yuan — $17 trillion — in transactions for the 12 months ended in June 2020.

Tax implications of buying foreign stocks in Canada

When you earn money on investments purchased outside Canada, you can potentially trigger 2 types of taxes — income tax paid to foreign governments (called a withholding tax) and income tax paid to the CRA.

Thankfully, there are ways to sidestep paying foreign income tax. In most cases, if you purchase stocks on a foreign stock exchange and hold your stocks in a non-registered account like a cash account or margin account, you only have to report interest income to the CRA. But if you choose to hold stocks in a registered account like an RRSP, RRIF or TFSA, this exception does not apply.

If you end up being double taxed, you can file Form T2209 — Federal Foreign Tax Credit in Canada to get a credit of up to 15% on withholding taxes you paid to another country, provided you report the same income to the CRA. Business entities that hold foreign stocks valued over $100,000 CAD must also file Form T1135 – Foreign Income Verification Statement except in certain circumstances like when stocks are held in an RRSP.

When filing a Canadian tax return, all foreign amounts must be converted to Canadian dollars. The exchange rate can be based on (1) the exchange rate on the exact date you received foreign investment income or (2) the Bank of Canada’s average annual exchange rate. Calculating and filing taxes on foreign investments is complicated.

There are lots of rules and exceptions to consider, so speak with a tax professional to make sure you understand your obligations.

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