Alibaba shares jump on news that it plans a dual initial listing in Hong Kong

Alibaba shares jump on news that it plans a dual initial listing in Hong Kong
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Shares of Alibaba in Hong Kong rose as much as 6% on Tuesday after the company said it would file for a dual primary listing in Hong Kong.

Kuang Da | Jiemian News | Visual China Group | Getty Images

AlibabaHong Kong shares rose as much as 6.5% on Tuesday after the Chinese tech giant said it would file for a dual primary listing in Hong Kong.

The stock rose by 4.82% by the end of the trading day.

The tech giant’s shares are already traded on both the US and Hong Kong exchanges, but the current listing in Hong Kong is secondary.

The initial listing process in Hong Kong is expected to be completed by the end of 2022. it is stated in the press release of the company.

The Hong Kong Stock Exchange recently changed rules, making it easier for more companies to obtain a dual primary listing on the Chinese financial center. Alibaba is said to be the first major company to take advantage of this rule change. According to Reuters.

“We have received approval from the Board to apply for the addition of Hong Kong as another primary listing location in the hope of developing a broader and more diversified investor base to participate in Alibaba’s growth and future, particularly from China and other markets in Asia.” Alibaba Group Chairman and CEO Daniel Zhang said in a press release.

“Strategic” actions

Ronald Wan, non-executive chairman of Partners Fintech Holdings, said the move is “very strategic” as the Hong Kong market does not offer Alibaba as much liquidity as the US market.

“We need something else, Stock Connect to attract mainland investors to invest in stocks,” he told CNBC’s “Street Signs Asia” on Tuesday.

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Having an initial listing in Hong Kong will allow Alibaba to tap into the Shenzhen-Hong Kong Stock Connect, which gives investors in mainland China access to stocks.

Chinese electric car manufacturers Xpeng and Lee Auto There are dual primary listings in Hong Kong and the US, and both are included in the Stock Exchange Access Scheme.

A China Renaissance report in January noted that, based on historical data, the turnover and speed of secondary-listed companies in Hong Kong is significantly lower than that of US ADRs.

ADRs are American Depositary Receipts and serve as proxies for the shares of foreign companies listed in the United States.

At the same time, Wan said that this is how Alibaba prepares itself US-China accounting dispute you continue

US and Chinese regulators are trying to resolve an audit dispute that threatens to delist US-listed Chinese companies.

“If something really goes wrong…Alibaba can move its main listing status back to Hong Kong and still enjoy reasonable liquidity in terms of stock trading,” he said.

“I think this will be a good move for both the company and its investors,” he said.

— CNBC’s Evelyn Cheng contributed to this report.

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