Months of anti-government protests in Hong Kong did little to dampen investor interest on Tuesday in the biggest share sale the city’s stock exchange has seen in nine years.
Alibaba Group’s shares in its secondary Hong Kong listing made a solid debut, trading 6.9 percent higher than their issue price of 176 Hong Kong dollars ($22.49) and at a small premium to the price of its parent shares in New York.
By late morning, the group’s shares climbed as much as 7.7 percent higher to 189.50 Hong Kong dollars ($24.21) each.
The Chinese e-commerce giant raised at least $11.3bn from the secondary listing, which has been seen as a vote of confidence in Hong Kong amid six months of sometimes violent protests.
That amount could rise to as much as $12.9bn if an over-allotment option is exercised. The option allows underwriters of the stock issue to release more shares to investors if demand is high enough.
At Tuesday’s listing ceremony, CEO Daniel Zhang noted Alibaba’s Hong Kong debut had been a long time coming.
“We came home. We came back to list in Hong Kong,” Zhang said to applause. “It helped make up for our regret five years ago.’’
Alibaba had hoped to initially list in Hong Kong but eventually chose New York for its record-breaking $25bn initial public offering in 2014 after its unusual governance structure failed to win approval from Hong Kong regulators.
Alibaba is the fifth most-traded company in New York this year, averaging $2.6bn a day in trading volume, according to Refinitiv data.
UOB Kay Hian sales director Steven Leung said the premium to its New York shares reflected the willingness of investors in Hong Kong and Asia to take on the stock of a company they know well, but added the positive momentum could be tough to maintain.
“(Alibaba’s) American Depository Share (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. Each ADS represents eight Hong Kong shares.
But analysts say Alibaba’s presence in the Hong Kong market could draw more investors and boost trading volumes for the stock exchange, which recently recorded its biggest profit slump in more than three years.
The sale could also tempt other Chinese tech giants, from ride-hailing firm Didi Chuxing Inc to TikTok-owner ByteDance Inc, to opt for Hong Kong over the US if they eventually go public.
“Alibaba will be the leading light for bringing more companies in,” Andrew Sullivan, a director at Pearl Bridge Partners, told Bloomberg Television. “You may see some new money being allocated. The keen competitor is going to be Tencent, which has historically traded at a premium.”