Hong Kong-listed Alibaba shares rose as much as 6% on Tuesday after the company said it will file for a dual primary listing in Hong Kong.
Kuang Da | Jiemian News | China Visual Group | Getty Images
Hong Kong-listed Alibaba shares rose 6% on Tuesday after the Chinese tech giant said it will file for a dual main listing in Hong Kong, before paring some gains.
The tech giant’s shares are already listed on the US and Hong Kong stock exchanges, but the current listing in Hong Kong is secondary.
The main listing process in Hong Kong is expected to be completed before the end of 2022. the company said in a press release.
Hong Kong’s stock exchange recently changed the rules, making it easier for more companies to obtain dual primary listings in the Chinese financial center. Alibaba is the first major company to take advantage of this rule change, according to Reuters.
“We have received Board approval to apply to add Hong Kong as another primary listing venue, hoping to foster a broader and more diversified investor base to share in Alibaba’s growth and future, especially from China and other Asian markets.” Alibaba Group Chairman and CEO Daniel Zhang said, according to the press release.
Alibaba shares rose 5.52%.
“Strategic” movement.
The move is “very strategic” because the Hong Kong market has not offered Alibaba as much liquidity as the US market, said Ronald Wan, non-executive chairman of Partners Fintech Holdings.
“We need something else, we need Stock Connect to attract mainland investors to invest in the stock,” he told CNBC’s “Street Signs Asia” on Tuesday.
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Having a main listing in Hong Kong will allow Alibaba to be listed on the Shenzhen-Hong Kong Stock Connect, which gives mainland Chinese investors access to the stock.
Chinese manufacturers of electric vehicles Xpeng and Li Auto have dual main listings in Hong Kong and the US, and both have been included in the share-linking scheme.
A China Renaissance report in January noted that, based on historical data, the turnover and speed of secondary listed companies in Hong Kong is much lower than that of ADRs in the US.
ADRs are American Depositary Receipts, which serve as proxies for shares of foreign companies listed in the US
At the same time, Wan said Alibaba is preparing even as the dispute between the United States and China over accounting issues continues.
US and Chinese regulators have been working to resolve an audit dispute that has threatened US-listed Chinese companies with delisting.
“Should something really go wrong … Alibaba can return its main listing status to Hong Kong and still enjoy reasonable liquidity in terms of share trading,” he said.
“I think it will be a good move for the company and also for its investors,” he added.
— CNBC’s Evelyn Cheng contributed to this report.
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