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Alibaba aims for a dual primary listing in Hong Kong – AFR


E-commerce giant Alibaba said Tuesday it would seek an initial listing in Hong Kong, potentially giving access to China’s vast pool of investors, as mainland officials suggest a long-standing crackdown on the tech sector may be coming to an end .

The move also comes as Chinese tech companies traded in New York are growing concerned about a regulatory initiative by US authorities amid simmering tensions between the superpowers.

Alibaba does have a secondary listing in Hong Kong, but that doesn’t allow it to participate in a popular Stock Connect program linked to exchanges in Shanghai and Shenzhen.

The initial listing, which is expected before the end of the year, would open that door.

News of the plan sent Alibaba’s shares up more than 5 percent on Tuesday, giving a boost to other tech companies and helping pull the broader Hang Seng index higher.

The Hangzhou-based group is one of several tech giants embroiled in a wide-ranging regulatory crackdown on alleged anti-competitive practices since late 2020.

The campaign was fueled by fears in Beijing that big internet companies control too much data and are expanding too quickly.

But officials appear to be taking it easier when grappling with a slowing economy. And in May, Premier Li Keqiang urged support for tech companies to list at home and abroad.

But there is still a tight regulatory environment: President Xi Jinping last month called for stronger oversight and security in fintech.

CEO and Group Chairman Daniel Zhang said on Tuesday the initial listing aims to “grow a broader and more diversified investor base to participate in Alibaba’s growth and future, particularly from China and other markets in Asia.”

“Hong Kong is also the launch pad for Alibaba’s globalization strategy, and we have full confidence in China’s economy and future.”

Alibaba said on Tuesday it had an average daily trading volume of $3.2 billion in the United States for the first six months of the year, while its Hong Kong secondary listing recorded around $700 million.

Hong Kong’s Stock Connect program allows companies to tap into mainland China’s liquidity for easier funding and higher valuations, but to qualify they must conduct much of their annual trade in China’s financial hub.

Alibaba is in a category of “innovative” Chinese companies with weighted voting rights or variable-interest companies that would be eligible for a dual primary listing in Hong Kong after a rule change by the exchange in January.

Forsyth Barr Asia analyst Willer Chen told Bloomberg that the move would be “massive” for Alibaba, adding that inclusion in Stock Connect could result in a “more diversified investor base.”

Beijing has resisted an attempt by US regulators to review audit papers of Chinese companies listed there, and Alibaba is among 250 companies that could face removal if no agreement is reached.

Domestically, Alibaba is still suffering from the tech crackdown as well as the slowdown in China’s economy caused by the fallout from strict Covid restrictions.

The company was hit with a record $2.75 billion fine for alleged unfair practices last year, and a planned 2020 IPO by Alibaba’s financial arm Ant Group – which would have been the world’s largest IPO at the time – was canceled at the last minute.

Alibaba has lost about two-thirds of its value since a 2020 peak, according to Bloomberg, and in May the company reported that earnings fell 59 percent in its most recent fiscal year.

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