Alibaba's stock rises on the announcement of its Hong Kong main listing

Updated on July 27, 2022 12:20 PM by Andrew Koschiev

Alibaba

Alibaba said that it intends to increase the number of mainland Chinese investors who are authorized to buy its stock.

The Chinese internet giant

The Chinese internet giant announced in a statement on Tuesday that its board has accepted an application to upgrade its Hong Kong shares to the main listing, which it anticipates will occur before the end of the year.

Listing on the New York Stock Exchange

Alibaba (BABA) already has a main listing on the New York Stock Exchange, where its shares have been traded since its enormous IPO in 2014. Once the shift is complete, the firm will continue its operations there and hold dual primary listings, according to the statement.

Since 2019, the business has had a secondary listing in Hong Kong. At that time, it became part of a wave of Chinese companies that were staging what many people saw as Wall Street homecoming parades.

Alibaba's public offering

After the news of Alibaba's most recent public offering was released, the share price of the company rose by 5 percent during premarket trading on Tuesday in both Hong Kong and New York.

Alibaba's development and future

Daniel Zhang, chairman and chief executive officer of the business, stated in a statement that the decision was made "in the interests of encouraging a broader and more diverse investor base to join in Alibaba's development and future, particularly from China and other Asian markets."

China's broad crackdown

Alibaba has been severely impacted by China's broad crackdown on its once-thriving technology sector. Since then, the company's New York and Hong Kong shares have been declining, shedding 49 percent of their value on both exchanges in the past year. This year, its stock prices in each city have been under pressure.

Stephen Innes

According to Stephen Innes, managing partner of SPI Asset Management, the improved listing could alleviate some of the load.

Shanghai and Shenzhen markets

In a report distributed to clients on Tuesday, he observed that "the listing will allow Alibaba to seek inclusion in the Stock Connect linkages with the Shanghai and Shenzhen markets," referring to a scheme that enables mainland Chinese and Hong Kong investors to trade shares over the border.

Year-long selloff

This might increase [Alibaba's] liquidity following a year-long sell-off caused by China's economic downturn and Beijing's crackdown on the country's most powerful internet companies," Innes said.

Fintech business Ant Group

Alibaba has come under increased scrutiny since the botched initial public offering (IPO) of its fintech business Ant Group in 2020, which would have been the largest in the world.

Monopolistic behavior

In addition, the authorities charged the e-commerce behemoth with engaging in monopolistic behavior, which resulted in the company being fined a stunning 18.2 billion yuan ($2.8 billion) last year.

Government had pledged

However, investors have hoped that China's crackdown will cease this year, following a historic decline. In April, Chinese official media claimed that the government had pledged to foster "healthy growth" of the technology industry, causing a rise in the value of the nation's technology stocks.