Shanghai: Alibaba Group Holding is trying to elevate its position by making it its primary listing on Asia's third largest stock exchange. This will give it access to a cross-border investment channel with mainland China, which will help it diversify and expand its investor base.
Alibaba said in a statement that it aims to end the process of converting its secondary listing to primary listing on the Hong Kong Stock Exchange before the end of the year.
According to the statement, Alibaba, the owner of this newspaper, will continue to list its American Depository Shares (ADS) on the New York Stock Exchange, adding Xpeng, BeiGene, and Li Auto as the dual primary listed companies between the two world companies.
According to Daniel Zhang Yong, President and CEO of Alibaba, "We have received an application to add Hong Kong as another primary listing destination in the hopes of fostering a wider and more diverse investor base to share in Alibaba's growth." Board approval for the future, especially from China and other markets in Asia."
Alibaba's listing status has been upgraded to a primary listing, making it eligible to participate in the Stock Connect program between the Shanghai and Shenzhen exchanges and Hong Kong. Mainland Chinese investors can trade shares listed in Hong Kong under an eight-year-old cross-border investment scheme, and foreign funds can invest in Chinese A-shares through Hong Kong.
Alibaba faces a tough road to become eligible for Stock Connect without applying to improve its position as 55% of its global business volume was to be in Hong Kong in the most recent fiscal year. Currently, Asia accounts for about 18% of its daily transactions.
Alibaba's public float and transaction volume in Hong Kong have increased significantly since its secondary listing in that city in November 2019. According to Alibaba, the average daily trading volume for the first half of the year was approximately US$700 million, while the daily average was around US$3.2 billion.
According to the company's statement, it anticipates that having a dual-primary listing status will enable it to increase liquidity and expand its reach to investors in China and other Asian countries.
According to Essence International's head of research Ernie Hohn, the conversion could encourage more Chinese companies with US listings – 261 of them, valued at US$1.3 trillion at the end of March – to list closer to their home bases where Asian would be investors. appreciate their value more.
Because they can't join Stock Connect through secondary listings, more US-listed Chinese companies will seek primary listings in Hong Kong, he predicted, adding that Alibaba's shares will rise on the news in the near term.
Due to the slowing Chinese economy, Alibaba in May reported revenue growth of 9% for the March quarter the slowest rate ever. The net loss widened to 16.24 billion yuan (US$2.4 billion), as against 5.48 billion yuan a year ago. Alibaba's June quarter results are expected to be released on August 4.
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