Alibaba, the Chinese online shopping giant, said on Tuesday that it would seek a primary listing in Hong Kong, a move that would eventually allow more people in mainland China to invest in it, and give it a buffer in case it is forced to delist in the US over regulatory concerns.
The listing is the latest signal that Chinese companies are looking for ways to mitigate risk as they find themselves under pressure from regulators on both sides of the Pacific. It also shows how the one-time love affair between Chinese tech firms and Wall Street is drawing to a close.
Over the past two years, Chinese firms seeking capital in the US have struggled amid a broad Chinese regulatory crackdown on Big Tech.
Alibaba’s financial affiliate, Ant Group, called off the blockbuster United States listing at the last minute at the behest of Chinese regulators. A separate investigation into the ride-hailing firm Didi led it to pull its shares only six months after a float in New York.
At the same time, US regulators have been working to enforce Trump-era rules that require better auditing disclosures. China’s government has insisted that much of the information, in particular sensitive data collected by internet firms, cannot be shared abroad. Although discussions between American and Chinese regulators are ongoing, the disagreements could result in the delisting of hundreds of Chinese companies.
For Alibaba, the new Hong Kong listing arrangement offers the company a safety net against such risks. It also gives the company a boost by making it more accessible to millions of Chinese traders, who have thus far had only limited ability to buy shares in a company they shop on every day. Alibaba’s shares rose more than 5 per cent in Tuesday morning trading in Hong Kong on the listing news.
Although Alibaba was already trading in Hong Kong, the new listing process will help it take advantage of a programme that connects the Hong Kong bourse to those in China. Alibaba said it expected to complete the process by the end of the year.
“Hong Kong is also the launchpad for Alibaba’s globalisation strategy,” the company’s chief executive, Daniel Zhang, said in a statement.
New York Times News Service