Chinese retail group Alibaba has announced this year's biggest share sale in June, with a plan to raise up to HK$100bn (£10bn) through a listing in Hong Kong. This is the first sale of this size being reviewed just days after confirmation of Hong Kong's plunge into the recession. Daily turnover on HK's stock market was HK$75.9 billion, down 20% annually.
Alibaba, China's biggest IPO, announced that it is selling 500m shares, however, it is ready to offer an extra 75m shares in case of substantial demand. Alibaba was forecasted to raise between HK£88bn and HK$101bn, before fees and other expenses. The company was originally planning to raise up to $20bn when it announced the second listing in June, but plans were paused due to the escalation of clashes between police and pro-democracy protesters. However, the listing is still the largest share offering across the markets in 2019, with banks like Credit Suisse, Citigroup, and JP Morgan working on the deal.
From the beginning, China's largest e-commerce company has announced it was issuing the new shares at 176 Hong Kong dollars ($22.50) each. Which is equal to a discount of about 3% to Alibaba's closing price in New York, where its stock is traded. Jeffrey Halley, senior market analyst for Asia Pacific at Oanda mentioned to CNN that Alibaba wants to make sure its Hong Kong listing generates a lot of interest and therefore they were pricing at this level, however, he forecasted the prices to be a lot higher on the day. Anyways, even at the slight discount to those traded in New York, Alibaba is set to raise as much as $12.9bn in its secondary listing in Hong Kong.
The shares will be listed in Hong Kong on November 26 under the ticker 9988 — In Chinese culture, the number eight is considered as the luckiest number. For its listing, Alibaba chose the stock code 9988, symbolizing prosperity and good fortune. It also initially raised 88 billion Hong Kong dollars, as mentioned by their representatives. The listing procedure in Hong Kong gives Alibaba a twofold advantage, the company can diversify its shareholder base which can be especially important considering the US-China trade war and it can also command a high price, due to the psychological trend investors have in Hong Kong, which is a hope for something positive amid the protests.
In this news, there is a very important detail not to be missed. Alibaba's decision to list in Hong Kong despite nearly six months of increasingly violent political unrest, stands as a message of support from Beijing and the company itself, for the city's status as an international finance hub. The listing can also stand as an earning booster for the Hong Kong stock exchange, whose profits are in decline at their highest rate in three years. Alibaba also does not hesitate to openly express its confidence in Hong Kong markets, last week Alibaba's representative Daniel Zhang has stated: "We continue to believe the future of Hong Kong remains bright. We hope we can contribute in our small way and participate in the future of Hong Kong."
In the end, it can be said that all of these events may stand as an injection of confidence in HK markets, which they are highly in need right now, on the other hand, this news from Alibaba can also be viewed as a Deliberate attempt by China to minimize outward HK investor flight capital. Time will tell!
Vladimer Chogoshvili
The shares will be listed in Hong Kong on November 26 under the ticker 9988 — In Chinese culture, the number eight is considered as the luckiest number. For its listing, Alibaba chose the stock code 9988, symbolizing prosperity and good fortune. It also initially raised 88 billion Hong Kong dollars, as mentioned by their representatives. The listing procedure in Hong Kong gives Alibaba a twofold advantage, the company can diversify its shareholder base which can be especially important considering the US-China trade war and it can also command a high price, due to the psychological trend investors have in Hong Kong, which is a hope for something positive amid the protests.
In this news, there is a very important detail not to be missed. Alibaba's decision to list in Hong Kong despite nearly six months of increasingly violent political unrest, stands as a message of support from Beijing and the company itself, for the city's status as an international finance hub. The listing can also stand as an earning booster for the Hong Kong stock exchange, whose profits are in decline at their highest rate in three years. Alibaba also does not hesitate to openly express its confidence in Hong Kong markets, last week Alibaba's representative Daniel Zhang has stated: "We continue to believe the future of Hong Kong remains bright. We hope we can contribute in our small way and participate in the future of Hong Kong."
In the end, it can be said that all of these events may stand as an injection of confidence in HK markets, which they are highly in need right now, on the other hand, this news from Alibaba can also be viewed as a Deliberate attempt by China to minimize outward HK investor flight capital. Time will tell!
Vladimer Chogoshvili