TECHNOLOGY: Alibaba is planning what could be the biggest US public debut ever. Picture: REUTERS
TECHNOLOGY: Alibaba is planning what could be the biggest US public debut ever. Picture: REUTERS

Shanghai/Hong Kong — Alibaba will "seriously consider" listing in Hong Kong, founder Jack Ma says, potentially providing a powerful boost to the financial hub which is preparing to allow dual-class share listings.

Ma made the comments at an event in the city on Monday, in response to remarks by Hong Kong CE Carrie Lam about how she hoped Alibaba would consider returning to Hong Kong to list, an Alibaba spokeswoman said.

"Daring to speak like this marks a strong commitment so we will definitely seriously consider the Hong Kong market," Ma said in response to Lam’s speech, according to a transcript provided by Alibaba.

When asked by reporters about his comments after he met President Emmanuel Macron in Beijing on Tuesday, Ma said Alibaba was considering listing subsidiaries in Hong Kong, without elaborating. Macron is on the second leg of a three-day state visit in China.

The Alibaba spokeswoman said there were no further details available on what any Hong Kong listing plan could involve.

Alibaba held its record $25bn public float in New York in 2014 after Hong Kong, its favoured venue, refused to accept its governance structure, where a self-selecting group of senior managers controls the majority of board appointments.

Hong Kong is now set to allow dual-class shares under rule changes to be proposed by the city’s stock exchange as it raises the stakes in its battle against New York for blockbuster Chinese initial public offerings.

Such shares grant differentiated voting rights and underpin the alternative governance and shareholding structures favoured by many owners of new-age industries such as technology.

More than $3bn worth of Alibaba shares were traded on Monday, based on Reuters calculations using Nasdaq data. The stock closed at $190.33, with 16.23-million shares traded.

That compares with the Hong Kong Exchanges and Clearing’s average daily securities turnover of HK$88.2bn ($11.28bn) in 2017.

‘New economy’ platform

Shares in Hong Kong Exchanges and Clearing, the city’s exchange operator, rose as much as 3.1% to HK$270 on Tuesday, their highest level since July 2015.

Analysts said an Alibaba listing in Hong Kong could help drive more funds from the mainland towards the city and could convince other big companies, in particular technology-related ones, to list in the financial hub.

"If the trading volume in Hong Kong is even better than that in the US, it will send out a signal to other new economy new listings that Hong Kong is a much better place for a listing than the US," said Steven Leung, sales director at UOB Kay Hian in Hong Kong.

For Alibaba, it could provide greater access to investors closer to China who are familiar with its business, and allow it to benefit from the Hong Kong government’s growing support for financial services innovation, said James Lloyd, Asia-Pacific FinTech leader at consulting firm EY.

The Hong Kong exchange said in December that it had begun drafting specific rule changes for allowing dual-class shares that will be put up for a formal public consultation in the first three months of 2018.

Under the planned rule changes, "innovative" Chinese companies with a market capitalisation of more than HK$10bn and a primary listing on the New York Stock Exchange, Nasdaq or the London Stock Exchange would be able to seek a secondary listing in Hong Kong. The exchange has not yet defined what "innovative" is.

"We are also creating a new route to secondary listings in Hong Kong to attract companies from emerging and innovative sectors. We are aware that many successful new economy companies already listed in the US and UK would benefit from these reforms," the exchange’s CEO, Charles Li, wrote in a blog post last month when the proposed changes were put forward.

Just 3% of Hong Kong listings in the past decade, by market value, have been so-called "new economy" companies, compared with 47% for the New York Stock Exchange, according to a discussion paper published by the Hong Kong exchange in June.

Some analysts said technical issues and underlying concerns about the dual-class structure still needed to be resolved and fine tuned.

"The main concern is about the protection to minority investors under the dual structure," said Linus Yip, chief strategist at First Shanghai Securities.