BEIJING, July 26 (TMTPOST) – Chinese e-commerce giant Alibaba said on Tuesday that it would file for a primary listing in Hong Kong in an apparent effort to cope with uncertainties associated with an audit dispute between Chinese and U.S. regulators.
Hong Kong is now Alibaba's secondary listing venue. The primary listing is expected to be completed by the end of 2022. Upon successful listing, Alibaba will become a dual primary listed company on the stock exchanges of Hong Kong and New York.
Alibaba’s CEO Daniel Zhang said in a statement that the company would pursue the dual listing to access a wider and more diverse investor base. “Hong Kong is also the launch pad for Alibaba’s globalization strategy, and we are fully confident in China’s economy and future," Zhang said.
After the dual primary listing, the company will gain access to a transborder investment channel with mainland China known as Stock Connect. The Stock Connect scheme enables investors in mainland China to buy the company’s shares more easily. The scheme is a cross-boundary investment channel that connects the Shanghai Stock Exchange and the Hong Kong Stock Exchange. Under the program, investors in each market are able to trade shares on the other market using their local brokers and clearing houses. Chinese Premier Li Keqiang announced the programme on April 10, 2014. The scheme was launched on November 17, 2014.
Alibaba went public on the New York Stock Exchange in September 2014, marking the biggest IPO in history at the time. The company launched a secondary dual listing on the Hong Kong Stock Exchange in November 2019.
Alibaba’s decision comes as both regulators in the United States and China are cracking down on publicly listed Chinese companies after Alibaba was fined US$2.8 billion and had to halt the IPO of its fintech arm Ant Group in a regulatory clampdown. The company is also facing an audit dispute between China and the United States that might push out hundreds of Chinese companies listed in New York.
Alibaba's stock price went up 3.4% at market opening on Tuesday while the Hang Seng Index rose by 0.55%.