This undated file photo shows two staff members walking past the logo of Alibaba at Alibaba Group's Xixi base in Hangzhou, capital of east China's Zhejiang province. (JU HUANZONG / XINHUA)
SHANGHAI – Alibaba will apply for a primary listing in Hong Kong and keep its US listing, the first big company to take advantage of a rule change allowing high-tech mainland firms with dual class shares to seek dual primary listings in Hong Kong.
Shares in Alibaba rose 4 percent in Hong Kong upon market opening in response to the e-commerce giant's move announced on Tuesday.
Analysts said the change should give mainland China investors easier access to the shares via a link to the Hong Kong bourse known as the Stock Connect. At 0303 GMT, the shares were up 5 percent while Hong Kong's benchmark Hang Seng Index was up 1.2 percent.
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Already present on the Hong Kong bourse with a secondary listing since 2019, Alibaba said it expects the primary listing to be completed by the end of 2022. Chief Executive Daniel Zhang said the dual listing would foster a "wider and more diversified investor base".
Already present on the Hong Kong bourse with a secondary listing since 2019, Alibaba said it expects the primary listing to be completed by the end of 2022. Chief Executive Daniel Zhang said the dual listing would foster a "wider and more diversified investor base"
The move comes after the Hong Kong Stock Exchange in January changed its rules to allow "innovative" mainland companies with weighted voting rights or variable interest entities (VIE) to carry out dual primary listings in the city.
Under a VIE structure, a mainland company sets up an offshore entity for overseas listing purposes that allows foreign investors to buy into the stock.
"Hong Kong is also the launch pad for Alibaba's globalization strategy, and we are fully confident in China's economy and future," Alibaba's CEO Zhang said in a statement.
Alibaba listed on the New York Stock Exchange in September 2014, marking what was at the time the largest IPO in history.
Justin Tang, head of Asian research at investment advisor United First Partners in Singapore, said that Alibaba's decision would boost its shares due to its potential inclusion in Stock Connect.
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In order to switch to a dual primary listing, the HKEX said companies had to have a good track record of at least two full financial years listed overseas, and a capitalization of at least HK$40 billion ($5.10 billion) or a market value of at least HK$10 billion plus revenue of at least HK$1 billion for the most recent financial year.