Alibaba, China’s online shopping giant, said on Tuesday it would seek a primary listing in Hong Kong, a move that will eventually allow more people in mainland China to invest in it and give it a chance in the event it is forced to delist in the United States over regulatory concerns.
The listing is the latest signal that Chinese companies are looking 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 companies and Wall Street is draw near.
Over the past two years, Chinese companies seeking capital in the United States have struggled amid China’s widespread repression of Big Tech. Alibaba’s financial affiliate, Ant Group, delisted the blockbuster in the United States at the last minute at the behest of Chinese regulators. A separate investigation to ride-hailing company Didi caused it to pull its stock just six months after floating in New York.
At the same time, US regulators have been working to enforce the Trump-era rules required Better disclosure audit. The Chinese government insists that most information, especially sensitive data collected by internet companies, cannot be shared abroad. Although discussions between US and Chinese regulators are ongoing, disagreements could lead to hundreds of Chinese companies being delisted.
For Alibaba, the new Hong Kong listing deal provides the company with a safety net against such risks. It also gives the company a boost by making it more accessible to millions of Chinese merchants, who have so far only had a limited ability to buy shares of a company they shop for on a daily basis. . Alibaba shares rose more than 5% in Tuesday morning trading in Hong Kong according to the listing news.
Although Alibaba already does business in Hong Kong, the new listing process will help Alibaba take advantage of a program that connects the Hong Kong stock exchange with markets in China. Alibaba said in a filing that it expects to complete the process by the end of the year.
“Hong Kong is also the launch pad for Alibaba’s globalization strategy,” the company’s chief executive officer, Daniel Zhang, said in a statement. He added that the new listing will foster “a broader and diversified investor base to share with Alibaba’s growth and future, especially from China and other markets in Asia.” .
The dual listing marks a major shift from less than a decade ago, when Alibaba conducted the largest IPO in the world by selling its shares in New York. in 2014. At the time, the company was a symbol of China’s rapid growth and rapid innovation in technology that seemed to be taking the world by storm.
But since 2020, Alibaba’s share price has more than halved as a result of a crackdown by Chinese regulators, as well as harsh Covid controls that have hit spending. domestic. The Chinese government has imposed a series of large fines on the country’s biggest internet companies. Alibaba was ordered to pay 2.8 billion dollars for an antitrust violation to occur by 2021; Just last week, Didi, the ride-hailing giant, was charged with $1.2 billion.
Analysts say regulators can ease pressure on Chinese internet companies to help fuel sagging economic growth. But many see Beijing’s squeeze on Big Tech as a feature here to survive.
