Alibaba had hoped to initially list in Hong Kong, but eventually chose New York for its record-breaking $25 billion initial public offering in 2014 after its unusual governance structure failed to win acceptance from Hong Kong regulators.
Alibaba Group’s (BABA.N) (9988.HK) Hong Kong shares made a solid debut on Tuesday, trading 6.9% higher than their issue price and at a small premium to pricing in New York after marking the world’s largest stock sale this year.
The Chinese e-commerce giant has raised at least $11.3 billion from the secondary listing, which has been seen as a vote of confidence in Hong Kong amid six months of sometimes violent anti-government protests.
That amount could climb to as much as $12.9 billion if Alibaba chooses to exercise an over-allotment option within 30 days of the start of trade.
By late morning, the shares were exchanging hands at HK$188.10. That compares with its issue price of HK$176 and a closing price for Alibaba’s ADS of $190.45 which would be equivalent to HK$186.3 a share as each ADR is worth eight Hong Kong shares.
The Hong Kong and New York stocks are fungible, which means investors can buy and sell the same shares on either exchange and that pricing on the exchanges are unlikely to diverge too far from each other.
UOB Kay Hian sales director Steven Leung said the premium to New York reflected the willingness of investors in the city and Asia to take on the stock of a company they know well but added that the positive momentum could be tough to maintain.
“The ADS is already considered quite high and now the Hong Kong price is showing a premium, so the near term upside in Hong Kong could be limited,” he said.
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