News Alert: Applying for primary listing in Hong Kong, positive to share price
- Alibaba announced to apply for primary listing in Hong Kong
- The new status is expected to become effective by end of 2022
- Positive to share price due to (1) the possible inclusion into Stock Connect and (2) easing of investor’s concern on potential delisting from US
- We currently rate BUY with TP of HK$157/ US$161
What’s New
– Alibaba (9988 HK / BABA US) announced to apply for primary listing in Hong Kong, according to HKEx announcement today.
– The company will keep its dual listing status in US but make Hong Kong as the primary listing location. The new status is expected to become effective by end of 2022.
– The development is expected to broaden Alibaba’s investor base and expand access to China and other Asian investors.
– The company’s public float on HKEx has been increasing since its secondary listing in Nov 2019. In the first six months ended 30 Jun 2022, the stock’s daily trading volume in Hong Kong was c.US$0.7 billion, compared to an average daily trading volume of approximately US$3.2bn in US.
Our View:
– The news is positive to share price on (1) the possible inclusion into Stock Connect and (2) easing of investor’s concern on potential delisting from US.
– Currently, HKEx only allows primary listing stocks to join the Stock Connect linked with Shanghai and Shenzhen exchanges. Alibaba’s primary listing in Hong Kong allows Chinese investors to buy the stock via southbound trading.
– We currently rate BUY on the counter with TP of HK$157/ US$161.