Alibaba to upgrade Hong Kong listing amid profit drop

HONG KONG

Chinese e-commerce giant Alibaba said on Aug. 23 it would upgrade its Hong Kong-listed shares to primary status, opening it up to China's huge army of investors that could potentially rake in billions of dollars for the firm.

The decision will provide a much-needed boost to the firm, which has underperformed the market in recent years owing to weak consumption and after a painful crackdown by Beijing on the tech industry.

"We are pleased to announce that the voluntary conversion of our secondary listing to primary listing on the Hong Kong Stock Exchange will become effective on Aug. 28," the company announced on Aug. 23.

The firm, which is also listed in New York, had flagged the idea two years ago amid worries about a regulatory drive by U.S. authorities as tensions simmered between the superpowers, though that was later put off.

Alibaba has been primarily traded in New York since 2014 and remained dual-listed after its notable return to Hong Kong through a second listing in 2019.

However, the firm's shares in Hong Kong have plunged since the crackdown began and are down about 75 percent from their peak in 2020.

A conversion to primary status in Hong Kong could pave way for Alibaba to enter a cross-border scheme that allows investors in Shenzhen and Shanghai to trade Hong Kong-listed shares.

That would open it up to China's more than 200 million investors and could see capital inflows of up to US$19.5 billion in the first six months of inclusion, according to Bloomberg News.

Alibaba this month reported a 29 percent fall in quarterly profit as it battles sluggish activity among China's consumers as leaders struggle to kickstart the stuttering economy.