November 6, 2020

Beijing’s suspension of Chinese fintech juggernaut Ant Financial’s initial public offering, triggered by billionaire and company co-founder Jack Ma’s comments criticizing China’s financial regulatory environment, displays the degree to which political priorities trump other considerations in China. The listing, initially scheduled for yesterday, was set to break records – it had attracted orders of around $3 trillion – and would have raised the profile of Shanghai’s STAR market, which was launched only last year. Ma’s comments, made at a conference on October 24, took aim at Chinese and global financial regulators for outdated regulation methods that stifle innovation and fail to provide opportunity for young talent. Ant Financial is a dominant Chinese provider of e-pay services through its Alipay app and is also a major player in consumer lending and credit scoring. Beijing is expected to allow the IPO to move forward eventually, but investors have good reason to be more skittish about the risks inherent in investing in China than they were just a few days prior. China’s tech competitiveness is a critical element of its global rise, but this incident is a signal that just because a company is important for China’s tech ambitions does not mean that company is immune from domestic political risk. Savvy foreign investors in China will understand that they must be mindful that politics – specifically toeing the Beijing line – will override other considerations.

ISIS has claimed credit for a terrorist attack in central Vienna earlier this week that killed at least five and injured more than 20. Police killed the gunman, 20-year old Kujtim Fejzulai, and arrested another 14 people suspected to have been linked to the attack. Fejzulai, a dual citizen of Austria and North Macedonia, spent nearly two years in prison for an attempt to travel to Syria to join ISIS. The incident follows two grisly beheadings in France, the first over use of a cartoon depicting the prophet Muhammad in a class lecture on freedom of expression and the second in a church in Nice, where the attacker also killed two additional bystanders. These incidents are sparking concerns that the EU is now confronting a new wave of terrorism by Muslim extremists as countries across the continent struggle to contain resurgent Covid-19 outbreaks. ISIS and other terrorist groups have encouraged supporters and sympathizers to take advantage of the distraction caused by the pandemic, using it as cover to expand their activities. As the pandemic drags on, possibly through to 2022, EU countries – and other western targets contending with Covid-19, among other worries, such as political turmoil – should remain vigilant against the possibility of stepped-up terrorist activity.

A Taliban attack on the governor’s compound in Kunduz in northern Afghanistan was likely carried out by a drone, signaling a troubling shift in the nature of ongoing warfare in the country. The attack, which killed at least four security officers, came amid ongoing negotiations between the Taliban and the Afghan government in Qatar, which have been the backdrop to a dramatic rise in violent incidents. There has been some speculation that the Taliban has previously used remote-controlled aerial devices in attacks in addition to propaganda and reconnaissance activities – if so, those attacks have gone largely unreported. However, drone attacks have been employed by other regional militant actors, including ISIS. The expanded use of armed drones would imply a new element of risk in an already-volatile situation marked by rising casualties (~2,100 civilians dead and another ~3,800 wounded in January-September 2020) and the ongoing drawdown of US troops. It is also emblematic of a global trend. Drones are cheap, small, and easy to use. Reports of the use of drones to carry out violent attacks has been reported in asymmetric conflicts worldwide, from ISIS in Iraq and Syria to drug cartels in Central America to the alleged assassination attempt on Venezuelan president Nicolás Maduro in 2018. Coupled with the real risk of stepped-up terrorist activity under the cover of the pandemic (see above), this trend is a clear cause for concern that should engender a robust defensive response.