Attempting to leverage the Chinese shareholder base, Alibaba Group Holding proposed listing shifts in Hong Kong. The proposed shifts would be from a secondary to a dual primary listing in Hong Kong. Based on the announcement, the firm sets up requirements for more disclosures. However, they will allow the Stock Connect trading link between exchanges in both China and Hong Kong. So, the liquidity of the shares would be easier to purchase for the Chinese investors.
Alibaba argues that the shift would take place by the end of the year. Precisely, it would be after having dual primary listings. This would be on the New York Stock Exchange and the Hong Kong Stock Exchange. Previously the firm gained an increase in 2019 for a secondary listing in Hong Kong. The company argues that the trading volume in the bloc covers $0.7bn. But the U.S. shows higher trading volume which is $3.2bn. In order to leverage the investor base as well as liquidity, they hope they could shift to dual-primary listing. They also plan to expand access to China and many other Asian investors.
An analyst noted that Hong Kong’s market is a bit illiquid than the U.S. So, the liquidity in Hong Kong may not be able to meet their expectations. Specifically, it may not be able to help the expected valuations that the Chinese investors are trading in the U.S. However, the city could still have the liquidity 0if the domestic funds go through the Stock Connect.
The major cause could be political tensions. Tensions between China and the U.S. have burdened the US-listed Chinese stocks. Moreover, the U.S. The Securities and Exchange Commission has found a long list of Chinese firms failing the audits. Thus, China’s regulatory crackdown affects Alibaba’s shares for the down of 51% recently.