Alibaba seeks main listing in Hong Kong

Alibaba, the Chinese online shopping giant, said on Tuesday it would seek a primary listing in Hong Kong, a move that would eventually allow more people in mainland China to invest there, and give it a buffer just in case. he would be forced to withdraw from the list. in the United States due to 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 love affair between Chinese tech companies and Wall Street is coming to an end.

Over the past two years, Chinese companies seeking capital in the United States have struggled amid a broad Chinese regulatory crackdown on Big Tech. Alibaba’s financial subsidiary, Ant Group, canceled a blockbuster listing in the United States at the last minute at the request of Chinese regulators. A separate investigation into ride-hailing company Didi led to it withdrawing its shares just six months after a float in New York.

At the same time, U.S. regulators have scrambled to enforce Trump-era rules that require better audit disclosures. The Chinese government has insisted that much of the information, especially sensitive data collected by internet companies, cannot be shared overseas. Although talks between US and Chinese regulators continue, the disagreements could see hundreds of Chinese companies delisted.

For Alibaba, the new listing in Hong Kong 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 traders, who until now had only a limited ability to buy shares in a company they buy from every day. . Alibaba shares rose nearly 5% in Hong Kong on Tuesday.

Although Alibaba was already trading in Hong Kong, the new listing process will help it take advantage of a program that links the Hong Kong exchange with those 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 launching pad for Alibaba’s globalization strategy,” the company’s chief executive, Daniel Zhang, said in a statement. He added that the new listing would foster “a broader and more diverse investor base to share in Alibaba’s growth and future, especially from China and other markets in Asia.”

The dual listing is a major departure from less than a decade ago, when Alibaba completed the world’s largest initial public offering by selling its shares in New York in 2014. At the time, the company was l emblem of a rapidly growing and rapidly innovating Chinese technology sector that seemed to be taking the world by storm.

But since 2020, Alibaba’s share price has more than halved following a crackdown by Chinese regulators, as well as tough Covid-19 controls that have hurt domestic spending. The Chinese government has imposed a series of hefty fines on the country’s biggest internet companies. Alibaba was ordered to pay $2.8 billion for antitrust violations in 2021; just last week, Didi was charged with $1.2 billion.

Analysts said regulators could ease pressure on Chinese internet companies to help boost sluggish economic growth. But many see Beijing’s tightened grip on Big Tech as a feature that’s here to stay.

Robert D. Coleman