HONG KONG (Reuters Breakingviews) – Alibaba’s relationship with Hong Kong has been a rocky one. Tensions range from the Chinese e-commerce giant’s 2013 decision to snub the city and take its then record-setting $25 billion initial public offering to New York, to last month’s shock suspension of financial technology affiliate Ant’s giant stock sale. And yet the two have plenty to celebrate on the one-year anniversary of the company’s landmark secondary listing.
Trading volumes are the most visible effect. An average $1 billion of Alibaba shares change hands daily in Hong Kong, ranking it alongside fellow tech titan Tencent and banking behemoth HSBC. Pandemic-induced volatility has helped, but the bourse’s record sums also owe a lot to Alibaba.
The success also has inspired copycats. Since Alibaba’s Hong Kong debut on Nov. 26, 2019, nine other U.S.-listed Chinese companies have followed suit, including e-commerce rival JD.com. The growing number of large technology stocks represents a big shift for a market better known for stodgy state-owned enterprises and tycoon-controlled property developers. There are enough now that Hang Seng rolled out a 30-strong dedicated tech index in July.
Hong Kong remains a laggard in ways. Alibaba’s trading volume in the Asian financial hub is only 22% of New York’s amount. It’s enough, however, that index creators FTSE and MSCI are likely to switch their references to the Hong Kong-traded shares. Other secondary listings could eventually get similar treatment.
Meantime, Alibaba raised $13 billion and diversified its shareholder register. It also now has an escape hatch if diplomatic relations deteriorate to the point that Washington forces Chinese companies to leave New York. And its shares may yet be added to a Hong Kong trading pipeline with the mainland, opening the door to a new batch of investors.
The bourse has plenty of fresh challenges, including finding a replacement for Chief Executive Charles Li and contending with the growing competition from Shanghai for new listings. Alibaba boss Daniel Zhang finds himself having to patch things up with Beijing after founder Jack Ma invited unwanted scrutiny of the company from regulators. For at least one day, though, Alibaba and Hong Kong can toast their newfound symbiosis.
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