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Analysis | Alibaba’s Hong Kong secondary listing gives Asia’s Taobao users a chance to own stakes in China’s biggest technology champion

  • Some analysts believe Alibaba’s stock remains undervalued despite nearly tripling since its 2014 IPO
  • Hong Kong hopes to attract more tech companies like Alibaba with listing rule changes

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A logo of Alibaba Group is seen during Alibaba Group's 11.11 Singles' Day global shopping festival at the company's headquarters in Hangzhou, Zhejiang province, China, November 11, 2019. Photo-REUTERS
Chad BrayandEnoch Yiu

Five years ago, Alibaba Group Holding chose New York over Hong Kong in what would be the world’s biggest initial public offering ever – worth a whopping US$25 billion.

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The listing on the New York Stock Exchange made the Chinese technology and e-commerce giant a globally recognised name – American pop star Taylor Swift performed several of her newest songs as part of a record Singles’ Day shopping event on Monday – and turned its founders into billionaires many times over. It also propelled Jack Ma, the company’s former chairman and a one-time English teacher in Hangzhou, to the global stage.

The company’s stock has nearly tripled from its IPO value in 2014, but the decision to list in the United States has been a mixed bag, as some analysts believe its shares remain undervalued and heightened tensions between Beijing and Washington have raised questions about whether Chinese companies would be restricted from accessing American capital markets in the future.

Alibaba, the owner of South China Morning Post, is hoping that a secondary listing of up to US$13.86 billion in Hong Kong would help it unlock that value by tapping investors closer to home in Asia, who are more familiar with its business, including the mainland Chinese, who could soon have their first opportunity to invest in the company and partake in its future growth.

“When Alibaba Group went public in 2014, we missed out on Hong Kong with regret,” Alibaba’s group executive chairman Daniel Zhang wrote in a letter to staff after the filing of the company’s listing plans. “We always said that if given the chance, we hope to come to Hong Kong. Over the last few years, there have been many encouraging reforms in Hong Kong’s capital market. During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright.”

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Despite being the most valuable Chinese company listed in the US, Alibaba’s market capitalisation significantly lags Amazon.com, the American e-commerce powerhouse run by Jeff Bezos with which Alibaba is most often compared. As of Tuesday’s close, Amazon’s capitalisation was US$881.5 billion, compared with Alibaba’s capitalisation of US$487.8 billion.
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