Alibaba seeks primary Hong Kong listing as US expulsion looms

Alibaba seeks primary Hong Kong listing as US expulsion looms

Bloomberg: Alibaba Group Holding Ltd. will seek a primary listing in Hong Kong, entrenching the financial hub’s status as an alternative to US markets ahead of a potential exodus of Chinese companies from New York.

The switch could provide a template for the roughly 200 US-traded Chinese companies from JD.com Inc. to Baidu Inc. that face delisting should Washington and Beijing fail to agree on allowing US regulators to review their financial audits. It also paves the way for investors in China to directly buy shares of the country’s most prominent e-commerce company for the first time.

A primary listing would allow Alibaba to seek inclusion in the Stock Connect link with the Shanghai and Shenzhen exchanges. That could expand the $285 billion giant’s investor base after a year-long selloff triggered by China’s economic slowdown and Beijing’s crackdown on its most powerful internet firms.

The move, expected by year-end, will grant hundreds of millions of investors in mainland China direct access to one of the country’s most storied names, which in 2014 made waves when it debuted in New York as the largest-ever initial public offering. Alibaba’s action could encourage peers to follow suit, helping cement Hong Kong as an alternative venue now that American regulators are threatening to toss Chinese companies off US bourses unless they comply with auditing rules.

Alibaba rose as much as 6.5% in Hong Kong on Tuesday, while its US stock jumped 5.1% in pre-market trading in New York. Bourse operator Hong Kong Exchanges and Clearing Ltd. climbed more than 3.9%. SoftBank Group Corp., Alibaba’s largest shareholder, rose more than 3% in Tokyo.

“The timing may be right for investor interest as it aligns with the fading of the tech regulatory crackdown,” said Marvin Chen, a strategist at Bloomberg Intelligence. “More broadly, Alibaba is paving a path for US ADRs to move away from US exchanges, introduce domestic capital, and to be less reliant on global foreign investors.”