SHANGHAI — Alibaba ( 9988.HK ) plans to add an initial listing in Hong Kong to its New York presence, targeting investors in mainland China as it becomes the first major company to take advantage of a rule change. A financial center to attract high-tech Chinese companies.
The move by the e-commerce giant came on Tuesday after both Washington and Beijing scrutinized the Chinese company’s listing and after a devastating regulatory crackdown in China fined Alibaba $2.8 billion and floated an initial public offering (IPO). Its affiliated ant group.
Summary
companies
Expect to add HK primary listing by end of 2022, keep NYSE listing
HK shares jump nearly 6%; This decision will diversify the number of investors -CEO
Alibaba’s shares were seen fueling the influx of mainland Chinese investors
Ant Group executive steps down from Alibaba partnership
SHANGHAI, July 26 (Reuters) – Alibaba ( 9988.HK ) plans to add an initial listing in Hong Kong to its New York presence, targeting investors in mainland China as it becomes the first major company to take advantage of a rule change. A financial center to attract high-tech Chinese companies.
The move by the e-commerce giant came on Tuesday after both Washington and Beijing scrutinized the Chinese company’s listing and after a devastating regulatory crackdown in China fined Alibaba $2.8 billion and floated an initial public offering (IPO). Its affiliated ant group.
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It also comes in the wake of an audit dispute between China and the United States, which threatens to pull out hundreds of Chinese companies listed in New York.
Analysts said the change should give mainland Chinese investors easier access to shares through a link to the Hong Kong market, known as Stock Connect. At 0358 GMT, shares were up 5.9% while the Hong Kong benchmark (.HSI) was up 1.5%.
Expect to add HK primary listing by end of 2022, keep NYSE listing
HK shares jump nearly 6%; This decision will diversify the number of investors -CEO
Alibaba’s shares were seen fueling the influx of mainland Chinese investors
Ant Group executive steps down from Alibaba partnership
SHANGHAI, July 26 (Reuters) – Alibaba ( 9988.HK ) plans to add an initial listing in Hong Kong to its New York presence, targeting investors in mainland China as it becomes the first major company to take advantage of a rule change. A financial center to attract high-tech Chinese companies.
The move by the e-commerce giant came on Tuesday after both Washington and Beijing scrutinized the Chinese company’s listing and after a devastating regulatory crackdown in China fined Alibaba $2.8 billion and floated an initial public offering (IPO). Its affiliated ant group.
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It also comes in the wake of an audit dispute between China and the United States, which threatens to pull out hundreds of Chinese companies listed in New York.
Analysts said the change should give mainland Chinese investors easier access to shares through a link to the Hong Kong market, known as Stock Connect. At 0358 GMT, shares were up 5.9% while the Hong Kong benchmark (.HSI) was up 1.5%.
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“Being in Stock Connect means it will finally be more convenient for mainland Chinese investors to buy stocks, so investors are happy to step in and buy stocks in Hong Kong today,” says Louis Tse, managing director of Wealthy Securities.
Alibaba, which is already present on the Hong Kong market with a secondary listing since 2019, said it expects the primary listing to be completed by the end of 2022. Chief executive Daniel Zhang said the dual listing would foster a “broader and more diversified investor base”.
The move comes after the Hong Kong Stock Exchange (HKEX) changed its rules in January to allow “innovative” Chinese companies – those operating Internet or other high-tech businesses – to dually carry weighted voting rights or variable interest entities (VIEs). Preliminary list of cities.
Under the VIE structure, a Chinese company establishes an offshore entity for the purpose of foreign listing that allows foreign investors to buy into the stock.
“Hong Kong is also the launch pad of Alibaba’s globalization strategy, and we have full confidence in China’s economy and future,” Alibaba CEO Zhang said in a statement.
A sweeping crackdown
Alibaba listed on the New York Stock Exchange in September 2014, which at the time was the largest IPO in history.
Since 2020, the company’s share price has fallen in both markets, as Beijing’s sweeping regulatory crackdown has hit Chinese tech companies.
At the same time, US regulators have stepped up scrutiny of the accounts of Chinese companies listed in New York, demanding more transparency.
While broad in scope, the main focus of China’s crackdown has been regulators seeking to increase oversight of public offerings.
Last year, Chinese authorities launched an investigation into ride-hailing giant Didi Global after it listed in New York, citing data privacy concerns.
The company later de-listed and began preparing to list in Hong Kong, leading analysts to interpret the inquiry as Beijing’s desire to list data-rich companies domestically.
ANT group decoupling
Alibaba found itself in a similar crosshairs when regulators in Hong Kong and Shanghai abruptly halted Ant Group’s planned $37 billion IPO in late 2020.
Coinciding with the announcement of its dual primary listing, Alibaba said in its annual financial report on Tuesday that several Ant Group executives at Alibaba Partnerships, the e-commerce sector’s top decision-making body, had stepped down. Read on
The exit is part of the ongoing decoupling of the fintech division from Alibaba, spurred by a botched IPO. Read on
Justin Tang, head of Asia research at investment adviser United First Partners in Singapore, said Alibaba’s move would boost the company’s shares due to a possible inclusion in Stock Connect.
“In the context of other similar tech listings, this will be the playbook for companies looking to hedge against the regulatory risk that Chinese companies are facing on US markets,” he said.
To switch to dual primary listing, HKEX said companies must have a good track record of at least two full financial years of listing overseas and a capital or market value of at least HK$40 billion ($5.10 billion) for the most recent financial year and at least HK$10 billion for the most recent financial year and at least HK$1 billion in revenue.