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Hong Kong Exchanges and Clearing Ltd is the holding company for the city’s stock exchange, futures exchange and clearing company. Its market capitalisation made it the world’s biggest listed bourse as of the end of 2012. In December 2012, the HKEx clinched the US$2.2 billion takeover of the London Metal Exchange, the world's biggest marketplace for industrial metals.

 

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HKEx chief Charles Li Xiaojia urges reform as Alibaba opts for New York

Hong Kong stock exchange chief not prepared to bend rules for HK$100 billion listing of tech giant but says structural reform is under way

PUBLISHED : Monday, 17 March, 2014, 3:14am
UPDATED : Monday, 17 March, 2014, 5:20pm
 

Stock exchange chief Charles Li Xiaojia says the city must be ready to reform its share-listing rules if it wants to stay a globally competitive financial centre, but it was right to stick to principles that saw it lose out yesterday to New York for the potential HK$100 billion listing of Alibaba.

Li spoke to the South China Morning Post hours after mainland e-commerce giant Alibaba said it had picked New York after months of wrangling with Hong Kong regulators over its management structure that the Securities and Futures Commission said breached its "one shareholder, one vote" governance rules.

"Everything has a cost. Our persistence has a cost too," Li told the Post, but added that Hong Kong Exchanges and Clearing would continue with the review of its existing listing rules - which began after a stalemate with Alibaba last autumn - even though the deal was now dead.

We would not bend our existing rules just for one applicant
Charles Li Xiaojia

"The reform review in the HKEx will not stop because Alibaba has decided to list elsewhere," Li said. "We would not bend our existing rules just for one applicant, but Alibaba's proposal has propelled the management to review our operating model. The eventual loss may be even larger if we don't undergo reforms [of the] listing regime."

However, the stock exchange chief was careful to back regulation that many international investors - and the SFC - say define Hong Kong as a respected market in which to trade and invest.

"We feel proud of Hong Kong as we ensure that our rule of law and investor protection remain intact," Li said.

Hangzhou -based Alibaba, led by former English teacher Jack Ma Yun, said yesterday that it would begin the process for an initial public offering in New York.

Hong Kong's regulators had rejected Alibaba's wish for an amendment to the city's listing rules to accommodate a partnership structure that gives Ma and other senior managers the right to nominate a majority of board members, despite owning only around 10 per cent of the firm's stock. Exchanges in the US allow such dual-class structures. The other major stock holders in Alibaba are Yahoo and Softbank.

Alibaba is expected to raise US$15 billion in New York in the highest-profile listing since Facebook's US$16 billion IPO in 2012.

The estimate is based on the firm's current expected market value of between US$100 billion and US$120 billion.

Alibaba said on its corporate blog yesterday that the steps towards a US IPO would make the firm "more global and enhance the company's transparency, as well as allow the company to continue to pursue our long-term vision and ideals".

Investment banks, including Credit Suisse and Morgan Stanley, are said by market participants to be the lead managers for the Alibaba listing.

The US listing will provide a swift means for Alibaba to lower the cost of capital since the deal-hungry internet firm has spent more than US$3 billion in a buying spree over the past year.

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clsaclsa
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singleline
It's said that Ali's business asset package to be listed in the US doesn't include the most valuable and sensitive Alipay (****global.alipay.com/ospay/home.htm) and other Chinese internet financial businesses.
I think it is most reasonable and natural that Ali should be listed in its own country.
It may ultimately go back to Shanghai one day.
In the future, will Ali be similar to present-day General Electric (GE) in the US?
GE, the US conglomerate, has developed the treasury function to become a major, or even majority, profit centre for the business.
It has developed this function into an effective "shadow bank".
In 2007, GE's treasury function GE Capital held over $550 billion of assets, making it larger than some of America's top ten banks.
It contributed 55 per cent of GE's profits, mainly by borrowing money short-term to lend to customers over the long-term ("borrowing short and lending long").
GE was able to flourish as a member of the shadow banking system without having to bear the regulatory burdens of banks.
By 2008, however, it was forced to ask to participate in the US government's banking sector bail-out programme.
(From 'The Business Book')
petits.bijoux.35
I guess the problem here is whoever set up this system in Hong Kong was either outright evil, or plain dumb. No investor in their sane minds would believe any investment, however large or small, guarantees returns; only pirates and thugs do. This "one shareholder, one vote" is no different from a mob rule that stifles entrepreneurship and therefore not the only way if not a horrible way to run a business. Democracy is not freedom, voting doesn't equate actually doing the work and spending the time to nurture and develop a product (that may or may not turn out well). All investments are bets, gamble wisely.
singleline
Will Alibaba's HDRs (Hongkong Depositary Receipts) be traded in Hong Kong ?
Afterall, according to Winston Churchill, there are no eternal friends or eternal enemies, only eternal interests.
petits.bijoux.35
That's probably why Churchill never had any real friends and one can hardly find the UK on a map anyway.
xiaoblueleaf
No to become Asian wolf of Wall Street.
mankydanky
Charles' compensation needs to be reformed - downwards.
a_trading_guy
Deal! Deal! Deal! Charles needs Deal to justify his compensation at the expense of HK market's integrity and the return of HkEx's investors.
 
 
 
 
 

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