Alibaba shares surge 7% in Hong Kong IPO

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Alibaba booth at the World Artificial Intelligence Conference on August 30, 2019 in Shanghai. (Image credit: TechNode/Shi Jiayi)

Shares of Chinese tech behemoth Alibaba have surged around 7% following the company’s debut on the Hong Kong stock exchange on Tuesday in its long-awaited secondary listing.

Why it matters: Alibaba’s Hong Kong initial public offering (IPO), the world’s largest listing to date in 2019, is spurring optimism for investors in Chinese tech firms and is a vote of confidence in the Hong Kong market amid months-long pro-democracy protests throughout the city.

  • The company’s momentum in November is on the rise, including its better-then-expected 40% revenue growth for the September quarter disclosed on Nov. 2, followed by another record-breaking Singles Day during which it sold RMB 268.4 billion ($38.4 billion) in gross merchandise volume (GMV).
  • Alibaba’s listing comes amid an IPO boom among Chinese tech firms which seek funding from the public markets domestically and abroad.

Details: Shares for the company were trading at HK$188.1 each as of 1:00 p.m., 6.8% over the HK$176 issuance price and exceeding the top end of an indicated range of HK$188 apiece.

  • The shares hit an earlier high of HK$189.5 each before stabilizing at around HK$188.
  • Alibaba issued 500 million new ordinary shares plus 75 million in an over-allotment option in the IPO.
  • Ahead of the Hong Kong IPO, Alibaba’s US-listed shares climbed around 2% to close at $190.45 apiece on Monday.
  • The company plans to use the proceeds to implement strategies to drive user growth and engagement, empower businesses to facilitate digital transformation, and continue to innovate and invest for the long term, the company said in a statement.

Context: Alibaba chose New York over Hong Kong as the destination for its $25 billion primary listing in September 2014 primarily because the bourse did not allow a dual-class share structure.

  • Hong Kong removed the restriction on the dual-class structure in April 2018 to open the door for tech firms that have share classes with different voting rights.