Chinese e-commerce giant Alibaba, which has been trading on the New York Stock Exchange since 2014, is planning a secondary listing in Hong Kong. Trading is expected to begin on Nov. 26.
Andrew Karolyi is professor of economics at the Cornell SC Johnson College of Business and an expert in investment management with a focus on the study of international financial markets. Karolyi says that the listing helps to tap into the ever-deepening pools of capital in Asia.
“Firms seek to list shares on multiple overseas markets for a variety of reasons, including to broaden their investor base, to boost share liquidity, to enhance product brand, to raise capital on the best financial terms possible and in this way to boost valuations.
“Chinese e-commerce giant Alibaba likely always intended for its initial 2014 listing of American depositary receipts in New York to be supported with a follow-on listing and share issuance in a major financial center like Hong Kong. This opportunity allows for a full 24-hour trading cycle in the shares and it helps to tap into the ever-deepening pools of capital in Asia.
“That this listing and secondary offering on the Hong Kong Stock Exchange (HKSE) comes amid months of protests and with the backdrop of prolonged trade tensions between the U.S. and China shows just how committed Alibaba is to its long-term strategic goal. One cannot help but interpret this decision as a huge vote of confidence by one of the world’s largest companies in the future of the HKSE at a very welcome time for them.”