Should you trade Alibaba shares?

• Alibaba Group Holding Limited (HKG: 9988) share price rallied over 6% this week
• The e-commerce titan plans to apply for a primary listing status in Hong Kong
• Analysts said the listing could boost mainland money in the stock
• Keen to trade Alibaba shares? Open an account with us to start today.

Alibaba stock price: what’s the latest?

Alibaba shares jumped up as much as 6.5% this week, after the group said it will apply to turn its Hong Kong securities into a primary listing.

The Chinese e-commerce group’s board authorised the company’s management to apply for a primary listing on the Main Board of Hong Kong Stock Exchange on Tuesday (26 July 2022). Alibaba has held a secondary listing in Hong Kong since November 2019.

After completion of the primary listing process, which is expected to occur before the end of 2022, Alibaba will become a dual-primary listed company on the New York Stock Exchange in the form of American Depositary Shares and on the Hong Kong Stock Exchange in the form of ordinary shares.

Given the substantial presence of its business operations in Greater China, the company said it expects that a dual-primary listing status would allow it to broaden its investor base and facilitate incremental liquidity. In particular, it would allow the company to expand access to China- and other Asia-based investors.

‘Hong Kong and New York are both major global financial centers, with shared characteristics of openness and diversity. Hong Kong is also the launch pad for Alibaba’s globalization strategy, and we are fully confident in China’s economy and future,’ said Alibaba Group Chairman and Chief Executive Officer Daniel Zhang.

In the first six months ended 30 June 2022, Alibaba’s average daily trading volume in Hong Kong was approximately US$0.7 billion, compared to average daily trading volume of approximately US$3.2 billion in the US.

How do analysts view the listing upgrade?

Alibaba’s proposed primary listing in Hong Kong would facilitate stock purchases by mainland Chinese via a Stock Connect programme, which could ‘lead to a significant rise in mainland money in the stock’, Bloomberg Intelligence analyst Catherine Lim noted.

The company’s management is also likely to showcase the firm’s growth engines and developments on the mainland more actively as a result. This could ‘help allay concern about Alibaba’s longer-term outlook amid uncertainty over the Chinese economy and regulation’, she added.

Meanwhile, other analysts viewed the primary listing as a ‘fall back’, should the firm be forced to delist in the US.

Alibaba’s Hong Kong shares have fallen by approximately 13% in the last one month. Its market capitalisation is down some 66% since its 2020 peak.

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