Alibaba shares surge 7%

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HONG KONG

Alibaba Group’s Hong Kong shares closed their first trading session up 6.6 per cent from the issue price after this year’s largest stock sale. The Chinese e-commerce giant’s shares rose to HK$187.60 (S$32.75), versus a HK$176 issuance price. They traded under the code 9988 – auspicious numbers in Chinese culture that signify prosperity. Shares worth HK$13.99 billion were traded, according to Refinitiv data, making it the third biggest debut on record for the Hong Kong market. Alibaba is already the fifth most-traded company in New York this year, averaging US$2.6 billion a day, Refinitiv data showed.

The company has raised at least US$11.3 billion from its secondary listing, which has been seen as a vote of confidence in Hong Kong’s financial future amid six months of increasingly violent anti-government protests.

The figure could climb to as much as US$12.9 billion if Alibaba chooses to exercise an over-allotment option within 30 days of the start of trade. The funds raised from the Hong Kong listing will help Alibaba, Asia’s biggest company by market value and world’s seventh largest, invest more in a range of online services.

But analysts also note that the establishment of a base of investors in Hong Kong and China could function as a backup for the company should its shares be hit in New York amid the US-China trade dispute.

 

The Hong Kong and New York stocks are fungible, which means investors can buy and sell the same shares on either exchange and that pricing on the exchanges are unlikely to diverge too far from each other. The premium to New York reflects the willingness of investors in the city and Asia to take on the stock of a company they know well, market participants said.

 

Expectations are also high that it will get a lift in valuation when it becomes eligible for trading in the Stock Connect that links Shanghai and Shenzhen with Hong Kong next June. “There will be some upside for the company’s price in Hong Kong but I don’t think we will see the shares double or triple in a year,” said Geo Securities Chief Executive Francis Lun. At yesterday’s listing ceremony, CEO Daniel Zhang, lieutenants wearing Alibaba lapel pins and Hong Kong dignitaries were on hand to strike the opening gong. Mr Zhang noted the Hong Kong debut had been a long time coming. Alibaba had hoped to initially list in Hong Kong, but eventually chose New York for its record-breaking $25 billion initial public offering in 2014 after its unusual governance structure failed to win acceptance from Hong Kong regulators. The loss of the listing triggered years of argument and consultations that resulted in rule changes last year.

 

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