Alibaba tipped for 80pc debut surge
Shares of Alibaba.com are expected to surge more than 80 per cent from their initial public offering price on their trading debut today because of strong demand for the stock, analysts said.
Cyberquote.com, which tracks the grey-market price of local listings, said Alibaba.com's shares traded at a range of HK$24 to HK$25.30 yesterday, a 77 per cent to 87 per cent gain on its offer price of HK$13.50.
Based on the top grey-market price, investors can book a profit of HK$5,832 for every board lot or 500 shares before expenses, including brokerage fees and levy.
Investors who subscribed to the shares with margin financing would have to bear another HK$19 per share in interest costs, trimming their gain to about 30 per cent, market watchers said.
Alibaba.com, the mainland e-commerce firm, attracted more than 560,000 Hong Kong retail investors who placed HK$33.1 billion worth of orders, representing 257 times the 128 million shares in its Hong Kong offering.
Match watchers expect mainland investors, who see the firm as a surrogate for US dotcom firms, to be the main source of support to Alibaba.com's shares.
'The share price of Alibaba.com should be positive in the long term,' said Wong Chi-man, a China Everbright Securities analyst. 'Mainland investors are pouring funds to buy Alibaba.com, as they treat it as another Baidu.com, which listed in the Nasdaq.'
At its debut in August 2005, Baidu's price jumped from US$27 to US$66 in the first bid. The stock has since gained 1,473 per cent.
'Mainland investors don't want to miss the opportunities to make profits with overseas listings of internet stocks again, so they opened accounts in Hong Kong to subscribe to the [Alibaba.com] stock,' Mr Wong said.
Mainlanders view Alibaba.com as a national brand and many are lured by the charisma of its founder Jack Ma, some analysts said.
Alibaba.com will be the second major mainland internet firm listed in Hong Kong after the largest instant messaging operator Tencent Holdings in 2004.
Other mainland internet stocks such as Baidu.com, which runs the mainland's largest search engine, and portals Sina Corp, Sohu.com and NetEase are listed on the Nasdaq.
Alibaba.com is raising HK$11.5 billion by selling 858 million shares at HK$13.5 each. It will use its net proceeds of about HK$2.9 billion for acquisitions and expansion overseas.