Alibaba Group Holding Ltd. (NYSE: BABA) recently announced that it will be upgrading its listing on the Hong Kong Stock Exchange’s main board from Aug. 28, 2024. The move could allow the group, already listed on the New York Stock Exchange, to tap into a new pool of Chinese investors.
The listing upgrade will also make Alibaba a dual-listed company, capable of receiving investment from two of the most robust financial markets on the globe. Alibaba applied for the listing status upgrade in July 2022, and the move will significantly expand the company’s investor base and grant it access to more capital.
Although the upgrade will not include new fundraising and share offering, Alibaba noted in a public statement that it will be instrumental in helping the group widen its Asian investor market and boost the liquidity of Alibaba Group shares listed on the Hong Kong Stock Exchange. Alibaba Group is already one of the top three companies listed in the Hong Kong exchange in both share transaction volume and market capitalization. Furthermore, most of the company’s public float has moved to Hong Kong since it gained a secondary listing in the Hong Kong Stock Exchange in 2019.
Upgrading to a primary listing will undoubtedly help Alibaba Group attract investors in China and other Asian markets as it works to expand its investor pool. Once Alibaba’s Hong Kong listing is upgraded, the group will also be able to receive investment from investors in mainland China through the Hong Kong Stock Connect program.
Securities companies posit that Alibaba could be added to the Hong Kong Stock Connect program’s investment list as soon as September. China’s massive army of investors could potentially help the e-commerce conglomerate generate billions of dollars once its Hong Kong shares are upgraded to primary listing.
This will be a welcome relief for Alibaba because it has been plagued with underperformance for the past couple of years amid China’s crackdown on the technology industry and waning consumption. It will also provide Alibaba with a buffer against the strained tensions between China and the United States, where Alibaba shares are also listed.
Alibaba first considered upgrading its Hong Kong listing several years ago when rising tensions between the two superpowers led to fears of strict regulations and action by American authorities. Bloomberg estimates that the decision to upgrade its Hong Kong listing will grant Alibaba access to a whopping 200 million investors in China and generate capital inflows of up to $19.5 billion in just half a year.
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