Editorial | Alibaba gives Hong Kong vote of confidence

Amid all the bad news, Hong Kong’s main bourse has something to celebrate. Alibaba, the world’s largest online shopping platform, will have a “homecoming” listing later this month. The secondary listing is expected to raise US$10 billion but could be as high as US$13.4 billion if a “greenshoe” option is exercised to offer an extra 15 per cent of shares to investors. It will beat the US$8 billion raised by Uber, the ride-hailing company, when it listed in New York in May.

But the real significance of Alibaba’s return to Hong Kong is the vote of confidence in the city’s status as a global financial hub despite the ongoing social unrest. It will also be the city’s first paperless, fully automated listing, ending the need for retail investors to queue for subscription forms. The prospectus will only be available online. Alibaba, which also owns the South China Morning Post, is regarded as “the one that got away” by the Hong Kong stock exchange when it listed in New York in 2014 with a flotation worth US$25 billion. The company is considered Asia’s most valuable by market capitalisation.

Back then, local regulators held on to the once sacred principle of “one share, one vote”, established as a cardinal rule of share ownership in Hong Kong from at least the 1980s. Since then, the rules have been loosened as part of a financial reform to stay competitive with other global bourses such as those in New York, London and Shanghai. This means allowing dual-class share ownerships favoured by many new-economy and biotech companies to allow founders and/or management to retain strategic control even if they do not own a majority stake.

Alibaba will be the first tech blue chip to heed Beijing’s call for those having listed overseas to return home. Its expected success will encourage others to follow. But that may already be the next trend as an increasingly hostile United States, which at one point last month even threatened to delist Chinese companies, may no longer be considered welcome ground to help them raise capital, profile and prestige.

With Alibaba helping to put Hong Kong once again back at the top of the IPO market, it’s something for investors and officials to cheer about in these gloomy times.