HONG KONG (Reuters Breakingviews) – Alibaba’s relationship with Hong Kong has been a rocky one. Tensions vary from the Chinese language e-commerce large’s 2013 determination to snub the town and take its then record-setting $25 billion preliminary public providing to New York, to final month’s shock suspension of economic expertise affiliate Ant’s large stock sale. And but the 2 have loads to have fun on the one-year anniversary of the corporate’s landmark secondary itemizing.
Buying and selling volumes are essentially the most seen impact. A median $1 billion of Alibaba shares change palms each day in Hong Kong, rating it alongside fellow tech titan Tencent and banking behemoth HSBC. Pandemic-induced volatility has helped, however the bourse’s document sums additionally owe lots to Alibaba.
The success additionally has impressed copycats. Since Alibaba’s Hong Kong debut on Nov. 26, 2019, 9 different U.S.-listed Chinese language firms have adopted go well with, together with e-commerce rival JD.com. The rising variety of massive expertise stocks represents an enormous shift for a market higher recognized for stodgy state-owned enterprises and tycoon-controlled property builders. There are sufficient now that Hold Seng rolled out a 30-strong devoted tech index in July.
Hong Kong stays a laggard in methods. Alibaba’s buying and selling quantity within the Asian monetary hub is just 22% of New York’s quantity. It’s sufficient, nonetheless, that index creators FTSE and MSCI are prone to swap their references to the Hong Kong-traded shares. Different secondary listings may ultimately get comparable therapy.
Meantime, Alibaba raised $13 billion and diversified its shareholder register. It additionally now has an escape hatch if diplomatic relations deteriorate to the purpose that Washington forces Chinese language firms to go away New York. And its shares may but be added to a Hong Kong buying and selling pipeline with the mainland, opening the door to a brand new batch of buyers.
The bourse has loads of recent challenges, together with discovering a substitute for Chief Government Charles Li and contending with the rising competitors from Shanghai for brand spanking new listings. Alibaba boss Daniel Zhang finds himself having to patch issues up with Beijing after founder Jack Ma invited undesirable scrutiny of the corporate from regulators. For not less than sooner or later, although, Alibaba and Hong Kong can toast their newfound symbiosis.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.