The dual listing in Hong Kong and New York offers round-the-clock trading opportunities to Alibaba’s investors. Secondly, due to the time difference, when a major company event happens during business hours in China, the stock market in New York is unable to respond immediately. With the listing, mainland investors can bypass capital controls and invest in Alibaba stock from their home exchange through Stock Connect, while Alibaba can also bypass capital controls by receiving Hong Kong dollars that are pegged to the US dollar. Stock Connect, a collaboration launched in 2014 between the Hong Kong, Shanghai and Shenzhen Stock Exchanges, allows international and mainland Chinese investors to trade securities in each other’s market from their home exchanges. The decision to be listed in Hong Kong provides access to capital in Asia, which helps to mitigate the risks that Alibaba is facing. Alibaba is now listed on the Hong Kong Stock Exchange. On September 27, 2019, officials in the Trump administration have been discussing proposals to delist Chinese companies (including Alibaba) from the US stock market. On top of the existing tensions, Alibaba’s stocks in New York face a delisting risk. The market capitalisation of Alibaba’s US$500 billion is still much lesser than that of, which has a market capitalisation of nearly US$900 billion. Although the stock price has nearly tripled since 2014, some analysts believe that the shares are still undervalued. On the other hand, with the ongoing trade war and tensions between China and the US, there is increasing political risk in Alibaba’s stocks listed in New York. With months of unrest and uncertainty, it does not look like an ideal time for Alibaba to have their secondary listing in Hong Kong now. Each Alibaba’s ADR represents 8 Hong Kong shares. The secondary listing in Hong Kong is about half of the size of its US$25 billion IPO on the New York Stock Exchange (NYSE) in September 2014.Īlibaba’s American Depository Receipt (ADR) price opened at US$190.4 and closed at US$194.7 on 26 November on the NYSE. In this secondary listing in Hong Kong, Alibaba raised about HK$101.2billion (US$13 billion), which is relatively small compared to its market capitalisation of about US$500 billion. On 26 November 2019, Alibaba’s stock price in Hong Kong rose from its listing price of HK$176 (US$22.49) to HK187.6 (US$23.97) per share, a 6.6% increase, during its first day of trading on the Hong Kong Stock Exchange (HKEX).
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