Alibaba may be blocked from a new program in China that would allow investors in Hong Kong to buy its stocks.
The program is intended to link the Asian financial hub with Chinese investors. It’s a stock connector, and Alibaba could be excluded due to a rule barring companies with second listings from participating, according to Bloomberg.
Exchanges in Shenzhen, Shanghai and Hong Kong have not indicated that they’ll be making an exception for the eCommerce behemoth, though that may change in the future.
Alibaba — valued at HK$4.56 trillion ($587 billion USD) — is the country’s largest eCommerce platform. Its participation in the program could be unfair to bourses already competing to draw listings of local firms.
As unrest shakes Hong Kong, allowing giants like Alibaba to participate could contradict Beijing’s goal of developing its mainland exchanges. Large Chinese firms like JD.com and Baidu may also be encouraged to bypass Shenzhen and Shanghai bourses, and go with Hong Kong, if Alibaba or a similarly sized company were to participate.
The Hong Kong Stock Exchange has proposed changes to the China Securities Regulatory Commission, which hasn’t signaled that it will alter the previous arrangements, sources said. Companies with weighted voting rights and second listings have not been permitted to join the stock connector, though Hong Kong Stock Exchange spokespeople said that could be up for discussion at another time. However, the list of companies included in the stock connector will be updated on Feb. 17.
Alibaba’s second listing, valued at $13 million, was spurred by the expectation that it would invite a vast influx of capital from its home country, were it to be included in the stock connector. In its Hong Kong offering, Alibaba kept its governing structure, giving top executives the power to nominate board members, which would be considered weighted voting rights in Hong Kong.
Recently, Alibaba also invested in a milk delivery startup, and launched a retail chain.