Alibaba to use Hong Kong’s number one twin record, stocks jump

Hong Kong-listed Alibaba’s inventory jumped 6% on Tuesday after the company said it would seek a number one twin in Hong Kong.

Kuang Da | Jemian News | Visual Group China | Getty Images

Ali BabaHong Kong-listed inventory jumped 6% on Tuesday after the Chinese tech giant said it would seek a number one Hong Kong twin, before eliminating some features.

Shares of the tech giant are already trading on US and Hong Kong exchanges, but the current record in Hong Kong is secondary.

The number one registration procedure in Hong Kong is expected to be completed before the end of 2022, the company mentioned in a press release.

The Hong Kong Stock Exchange recently changed regulations, making it easier for other companies to achieve twin number one listings within China’s currency hub. Alibaba would be the first major company to make the most of this rules commerce, Reuters compliant.

“We have received board approval to seek the addition of Hong Kong as an alternate primary listing location, in hopes of fostering a broader and more diverse investor base to share in the growth and future of Alibaba, especially from China and other markets in Asia,” Alibaba Group Chairman and CEO Daniel Zhang mentioned, in accordance with the media release.

Alibaba’s inventory was up 5.52% so far.

“Strategic” transfer

The transfer is “very strategic” because the Hong Kong market has no longer presented as much liquidity to Alibaba as the US market, said Ronald Wan, non-executive chairman of Partners Fintech Holdings.

“We need something else, we need Stock Connect to get mainland investors to invest in stocks,” he told CNBC’s “Street Signs Asia” on Tuesday.

Having a number one in Hong Kong will allow Alibaba to be integrated into the Shenzhen-Hong Kong Stock Connect, which provides buyers in mainland China with a right of access to inventory.

Chinese electric car manufacturers Xpeng and Li-Auto have number one twin listings in Hong Kong and the United States, and each of them has been integrated into the inventory attachment system.

A Chinese Renaissance document from January noted that according to ancient knowledge, the turnover and pace of companies with a secondary record in Hong Kong does not match those of ADRs in the United States.

ADRs are US certificates of deposit, which function as proxies for shares of international companies registered in the United States.

Meanwhile, Wan said Alibaba is preparing even as the US-China dispute over accounting issues keep on going.

US and Chinese regulators have rushed to resolve an audit dispute that has threatened US-listed Chinese companies with delisting.

“In case something goes really wrong…Alibaba can transfer its primary listing status to Hong Kong and still enjoy reasonable liquidity in terms of stock trading,” he said.

“I think it will be a good decision for the company and for its investors as well,” he added.

— CNBC’s Evelyn Cheng contributed to this document.