E-commerce giant Alibaba Group Holding Ltd (阿里巴巴) yesterday said it would seek a primary listing in Hong Kong, potentially giving access to China’s vast pool of investors, as Chinese officials indicate a long-running crackdown on the tech sector could be coming to an end.
The move also comes as Chinese tech companies traded in New York grow increasingly worried about a regulatory drive by US authorities amid simmering tensions between the superpowers.
While Alibaba has a secondary listing in Hong Kong, that does not allow it to join a popular Stock Connect program that links to bourses in Shanghai and Shenzhen.
Photo: Reuters
The primary listing, which is expected to take place before the end of the year, would open that door.
News of the plan sent shares in Alibaba soaring more than 5 percent yesterday, boosting other tech firms and helping drag the broader Hang Seng Index higher.
Alibaba chief executive officer and group chairman Daniel Zhang (張勇) said the primary listing aimed to foster “a wider and more diversified investor base to share in Alibaba’s growth and future, especially from China and other markets in Asia.”
“Hong Kong is also the launch pad for Alibaba’s globalization strategy, and we are fully confident in China’s economy and future,” Zhang said.
Alibaba said it had an average daily trading volume of US$3.2 billion in the US in the first six months of the year, while its Hong Kong secondary listing saw about US$700 million.
Hong Kong’s Stock Connect program enables firms to take advantage of liquidity from China for easier financing and higher valuations, but to qualify they must conduct a majority of their annual trading in the Chinese finance hub.
Alibaba is among a category of “innovative” Chinese firms with weighted voting rights or variable interest entities that would be eligible for dual-primary listing in Hong Kong, following a rule change by the bourse in January.
The move would be “massive” for Alibaba, said Forsyth Barr Asia Ltd analyst Willer Chen (陳偉樂), adding that inclusion in Stock Connect could lead to a “more diversified investor base.”
Beijing has opposed an attempt by US regulators to inspect the audit papers of Chinese firms listed there, and Alibaba is among 250 companies that face potential removal if no deal is reached.
Domestically, Alibaba is still reeling from the tech crackdown as well as China’s slowing economy caused by the fallout from strict COVID-19 curbs.
The firm has lost about two-thirds of its value since a 2020 peak, Bloomberg said, and in May the firm reported that profit fell 59 percent in the past fiscal year.
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