Alibaba plans to pursue a primary listing on the Hong Kong Stock Exchange, which could help regional investors spend more on China’s biggest cloud company.
After completion of the primary listing process, expected to occur before the end of 2022, the company will then become dual-primary listed on the New York stock exchange as well as the Hong Kong one, it said today.
Currently, the Chinese tech giant maintains a secondary listing on the Hong Kong stock exchange, which it applied for in November 2019. It shared that in the first six months of 2022, its average daily trading volume in Hong Kong was $700 million, while in the US it was around $3.2 billion. The company said that it expects the dual listing status to allow it to broaden its investor base and expand access to China and other investors based in Asia.
“We have received approval from the board to apply to add Hong Kong as another primary listing venue, in the hopes of fostering a wider and more diversified investor base to share in Alibaba’s growth and future, especially from China and other markets in Asia,” said Alibaba Group chairman and chief executive officer Daniel Zhang. “Hong Kong and New York are both major global financial centres, with shared characteristics of openness and diversity. Hong Kong is also the launch pad for Alibaba’s globalisation strategy, and we are fully confident in China’s economy and future.”
The opening of a primary listing could attract interest from local investors on the continent, especially since Alibaba is the second biggest cloud company in the APAC region, beaten by AWS and followed by Microsoft, according to research from Synergy Research Group published in March 2022. However, while Amazon is the leader in four of five APAC sub-regions, Alibaba has a strong lead in China but is also well placed in the rest of East Asia, South & Southeast Asia and Oceania.
The US and China have experienced rising tensions over the past few years, with the Department of Commerce adding a dozen Chinese tech companies to its trade blacklist in November 2021. It said it did this to prevent the Chinese army from gaining access to critical US technologies.
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Additionally, China Mobile said it would list itself on the Chinese stock exchange in December 2021, hoping to raise 56 billion yuan (£6.6 billion). This came after laws introduced during the Trump administration removed the company from the New York stock exchange. It was removed due to an executive order that prevented US citizens from investing in companies linked to the Chinese military.
Last week, Chinese authorities hit ride-hailing company Didi with a $1 billion fine following a year-long investigation into its cyber security practices. The Chinese government also planned to ease restrictions which banned the company from adding new users to the platform. This came after it delisted from the US stock exchange in June, telling shareholders it needed to do so to resolve its cyber security investigation.
