Alibaba Group Holding Ltd. (NYSE: BABA) has announced plans to possibly list in Hong Kong in preparation for future dual class share listings. The company is considering listing subsidiaries after holding $25 billion in New York in 2014 following Hong Kong’s refusal of governance structure acceptance where a self selecting group of senior managers control the majority of board appointments. Currently, Hong Kong is allowing dual class shares under several rule changes that need to be approved by the city’s stock exchange as the stakes have been increasing against New York for initial public offerings in China.
On Monday, over $3 billion worth of Alibaba shares were traded, closing at $190.33 with 16.23 million shares traded. Hong Kong Exchanges and Clearing Ltd’s (HKEX) shares increased about 3.1% to HK$270 on Tuesday which marks the highest level since July 2015.
Alibaba’s listing in Hong Kong could help increase more funds from mainland China towards the city and could also convince other big technology related firms to list in that city as well. Investors closer to China could be given more access and can benefit from the Hong Kong government’s support for financial services innovation.
Chinese firms with a market capitalization over HK$10 billion and a listing on the NYSE, Nasdaq, or London Stock Exchange would be able to seek a secondary listing in Hong Kong under the new rule changes.