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alibaba group (hereinafter referred to as "ali") has completely "embraced" hong kong stocks. on august 28, alibaba issued a voluntary announcement, announcing the official completion of its dual primary listing in hong kong. so far, alibaba has become a company with dual primary listings on the hong kong stock exchange and the new york stock exchange.

alibaba's dual primary listing status not only protects it from the risks of a single market, but also attracts more investors. some institutions predict that alibaba will be included in the hong kong stock connect as early as september this year, and will bring an additional inflow of us$12 billion to alibaba in hong kong stocks. it took alibaba 11 years from the failure of its listing in hong kong to its secondary listing and then to its dual primary listing. however, the fierce competition in the e-commerce market is no longer what it used to be. although alibaba has made frequent moves in the capital market, it still needs to work hard on its business skills if it wants to gain long-term support from investors.

it is expected to be included in the hong kong stock connect in september

starting from august 28, alibaba's stock code in the hong kong stock exchange officially removed the "s" and changed from "alibaba-sw" to "alibaba-w". this is also one of the differences between alibaba's "secondary listing" and "dual primary listing". the "s" after the stock code means that the stock has been listed on other stock exchanges and does not need to meet the listing standards of the hong kong stock exchange. it can realize cross-market circulation of shares through international custodian banks and securities brokers.

after the dual primary listing, alibaba's common shares listed on the hong kong stock exchange and its american depositary shares listed on the new york stock exchange can continue to be convertible. more importantly, alibaba can increase its appeal to the global market through this dual primary listing conversion, including attracting more international investors to allocate alibaba's hong kong shares and more mainland investors to invest in alibaba through the hong kong stock connect channel.

according to wind stock data, as of the close of hong kong stocks on august 28, alibaba's share price was hk$79.1, down 1.06%, with a trading volume of 38.783 million shares and a 60-day increase of 5.3%.

according to morgan stanley's forecast, alibaba may be included in the hong kong stock connect as early as early september. at the same time, morgan stanley predicts that after being included in the hong kong stock connect, southbound funds flowing into the hong kong stock market from mainland china may bring about an incremental inflow of about us$12 billion to alibaba's hong kong stocks in the first six months. in the long run, the proportion of southbound funds holding shares may stabilize at more than 10%.

"after being included in the hong kong stock connect, domestic investors can directly purchase alibaba's shares through the hong kong stock connect, which will help further expand alibaba's investor base." he nanye, a special researcher at the star chart financial research institute, explained that dual primary listings can reduce the impact of single market fluctuations or investor sentiment on the company, and will also help the company achieve value reassessment and reduce the probability of its market value being underestimated.

he nanye also pointed out that the biggest benefit of dual primary listings is that it further weakens the impact of the us capital market on alibaba, including valuation, financing and pricing. "especially in the current international situation, dual primary listings can further disperse the hidden risks brought by a single system."

hong kong stock prices no longer “look” at us stocks

in fact, alibaba's emphasis on the hong kong stock exchange can be traced back to more than a decade ago. when the listing plan was first launched, hong kong was alibaba's first choice.

as early as september 2013, cai chongxin, then founder and vice chairman of alibaba group, said in an open letter titled "why alibaba launched the partner system" that "as a company with its main business in china, hong kong is naturally our first choice for listing." however, just one month later, then alibaba group ceo lu zhaoxi officially announced that he would abandon the plan to list on the hong kong stock exchange: "today's hong kong market still needs time to study and digest the governance structure innovation of emerging companies. we have decided not to choose to list in hong kong."

the "innovation in governance structure of emerging enterprises" mentioned by lu zhaoxi refers to alibaba's partnership system, which was also the core of the game between alibaba and the hong kong securities regulatory commission at that time. at that time, the hong kong regulatory authorities advocated "same shares, same rights", while alibaba adopted a "same shares, different rights" equity structure, that is, through the partnership system, partners have the right to nominate the majority of directors on the board of directors. the core of this is to ensure the control enjoyed by the founders and management by establishing a special power agency.

after all, judging from the equity structure at the time, partners including jack ma held 10% of the group's shares, while yahoo in the united states and softbank in japan held approximately 24% and 36% of the shares respectively. under such an equity structure, alibaba's partnership system was able to maintain jack ma and other partners' control over the company.

although cai chongxin explained in the article that the partnership system is to "fully protect the important rights and interests of shareholders" and did not question the "one share, one vote" system advocated by hong kong regulators, the partnership system was still a major obstacle for alibaba to knock on the door of the hong kong stock exchange at that time.

the game between the two also paved the way for the subsequent reform of the hong kong stock exchange. since 2017, the hong kong stock exchange has changed its previous attitude towards the differentiated voting rights structure of "same shares, different rights", and introduced the "differential voting rights system (classified voting system)" to accept companies with dual-structure governance. from 2019, when alibaba returned to the hong kong stock market through a secondary listing to now achieving a dual primary listing, alibaba finally has the right to set stock prices in hong kong, and the price of alibaba's hong kong stocks is no longer dependent on us stocks.

facing a double test

"dual primary listing is also a measure for companies at this stage to cope with changes in the international economic situation and the uncertainties brought about by macro policies and market environment." shen meng, director of xiangsong capital, told the beijing business daily reporter that alibaba's frequent actions in the capital market are also intended to boost investor confidence.

according to the announcement released by alibaba on the hong kong stock exchange in july, during the quarter ending june 30, it repurchased a total of 613 million common shares (equivalent to 77 million american depositary shares) at a total price of us$5.8 billion. as of june 30, 2024, the company still has a repurchase quota of us$26.1 billion under the share repurchase plan authorized by the board of directors, which is valid until march 2027.

it is worth mentioning that after the completion of the dual primary listing, alibaba needs to follow the disclosure requirements of hong kong stocks and disclose repurchase data on a daily basis. "under such rules, alibaba's disclosure of large-scale repurchases in us stocks will be more timely and transparent, and can also stabilize investors' psychological expectations to a certain extent." a securities industry practitioner told the beijing business daily reporter.

for alibaba, after obtaining the dual primary listing status, the hong kong stock exchange's audit requirements will be further increased. "the information disclosure requirements and audit requirements for companies listed in hong kong for the second time are relatively low. in principle, they are still based on the requirements of the overseas primary listing place." shen meng said that when alibaba converts to a dual primary listing, it will face greater regulatory pressure.

shen meng believes that it is not ruled out that alibaba will use hong kong as its main trading market in the future and gradually transition its listing structure from the united states to hong kong, china.

however, compared with the challenges alibaba faces in the capital market, the pressure faced by the group's business is more urgent. according to alibaba's first quarter financial report for fiscal year 2025 ending june 30 (alibaba's fiscal year is from april to march of the following year), alibaba's operating profit for the quarter was 35.989 billion yuan, a year-on-year decrease of 15%; net profit was 24.022 billion yuan, a year-on-year decrease of 27%. "alibaba is currently facing some growth problems, and its actions in the capital market are also to enhance investor confidence. but if you want to achieve more stable growth, you still need to seek breakthroughs in your business." shen meng said.

beijing business daily reporter qiao xinyi