Alibaba seeks primary listing in Hong Kong amid regulatory crackdowns

Alibaba seeks primary listing in Hong Kong amid regulatory crackdowns

by Sakina Raj

Chinese e-commerce giant Alibaba Group Holding Ltd. will reportedly pursue a primary listing in Hong Kong to strengthen its position as an alternative to US markets and enabling Chinese investors to make direct purchases of the firm’s shares for the first time.

The shopping platform stated that the move would help elevate the company’s trading status in Hong Kong, streamlining its inclusion in the Stock Connect link with the Shenzhen and Shanghai exchanges.

This could further boost the firm’s liquidity following a year-long sell-off amid the economic slowdown in China and Beijing’s regulatory crackdown.

The move has been speculated to take place by the end of this year. It comes after the Chinese firms were threatened to be removed from US bourses by the American regulatory authorities. This will offer millions of investors in mainland China an opportunity to directly buy shares in one of the most prominent companies in the country.

Alibaba made its debut on the New York stock exchange with the largest-ever initial public offering (IPO) in 2014.

Willer Chen, Analyst at Forsyth Barr Asia, considered this a major move for the company as it will be the largest secondary listing in Hong Kong, and that its inclusion in the Stock Connect will ensure a more varied investor base for the firm.

Having reached its peak in 2020, Alibaba’s value has dropped by two-thirds, struck by the regulatory crackdown in China over anti-competitive actions in the internet sector.

In its statement, the firm communicated that it saw a rise in transaction volume and public float on the Hong Kong bourse.

Nicolas Aguzin, CEO, HKEx, stated that many firms with secondary shares in the Hong Kong bourse are opting for primary listings, with some being forced to do so due to the market rules.   

The possibility of the inclusion of enterprises like Alibaba in Stock Connect has become a matter of intense assumption among retailers in Hong Kong. The investment channel currently excludes firms with weighted voting rights and secondary listings from its trading links with the mainland.

Marvin Chen, Strategist, Bloomberg Intelligence, added that Alibaba is making way for American ADRs to shift from US exchanges, introduce local capital, and be less dependent on global foreign investors.

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Sakina Raj

Armed with a degree in English Literature, Sakina chose to explore the world of content writing and pursue it as a career. Sakina has been playing with words for over five years now and currently pens down articles for Marketprimes and various other online portals relating to diverse domains. Whe Read more...