The listing will help Alibaba access more Chinese and Asia-based investors and seek capital infusion via the Shenzhen-Hong Kong Stock Connect program, which links the mainland China market to Hong Kong.
With growing tension between Beijing and Washington, Chinese companies listed on the New York Stock Exchange might be forced to delist if a negotiation falls apart that allows U.S. regulators to review Chinese firms’ financial audits.
Alibaba would also help set a precedent for hundreds of Chinese companies listed in New York that wish to utilize Hong Kong as an alternative public market.
Alibaba has a secondary listing in Hong Kong. This year, the company has seen a significant increase in its public float and transaction volume. For the first six months ending June 30, average daily trading volume was $700 million, which is almost one-fifth of its average volume in New York, according to the company.
The primary listing is expected to happen by the end of 2022. After the news was revealed, Alibaba’s Hong Kong-listed shares jumped 4.8 percent.
Seven executives from the Alibaba-affiliated Ant Group also stepped down as partners to better separate the two groups from one another.
After Beijing launched a regulatory crackdown in 2020, Ant’s $34 billion Shanghai and Hong Kong IPO, which would have been the largest in the world at the time, was called off at the last minute, and Alibaba was fined a record $2.75 billion in 2021.
But as China’s economic growth slows to 0.4 percent in the second quarter this year, the government is planning to ease restrictions on big tech. In May, Premier Li Keqiang openly supported Chinese companies listing abroad.
Since then, Ant has axed a non-executive director from its board but the payment and financial service provider has rebuffed reports that it’s gearing up for another IPO attempt.