Chinese investors can soon support their own Alibaba
$BABA-SW(09988.HK$ Alibaba announced that it is seeking primary listing in Hong Kong. Currently Alibaba is trading in the US and HK exchanges but it is a secondary listing for the latter.
The technical differences of a primary and secondary listing aren't important for investors except one - Alibaba could be included in the Shanghai/Shenzhen-HK Stock Connect.
While you might be having the options of investing globally, Chinese investors do not have that luxury. They are mainly limited to the A-share markets (Shanghai, Shenzhen and Beijing).
Even for Hong Kong listed stocks, the Mainland investors can only invest in those counters included in the Stock Connect program.
Alibaba was excluded in the Stock Connect because it was a secondary listing. Upgrading to a primary listing means it could be added to the Connect and Mainland investors can buy it conveniently.
It is funny to think that one of the most iconic companies and who derived most revenue in China, is not majority owned by the Chinese.
The largest shareholder in Alibaba is Softbank at 25%. Jack Ma only has 2.25%. Apart from the fund houses, 66% is owned by other investors all around the world.
So the tech regulations in China hurt foreign investors more than their local ones.
It might be good that more Chinese investors own Alibaba and other Chinese tech stocks as they are more supportive of their own enterprises as compared to foreigners. The skin in the game might also make the government more apprehensive in implementing harsh measures.
I say this because the CSI 300 which tracks the A-share market (mainly owned by PRC investors) was down by 27% from its peak while the Hang Seng Tech Index (mainly owned by foreign investors) was down by 56%.
This shows that PRC investors were less spooked by what was going on in China as compared to the foreign investors. They live there and they walk the ground. Foreigners don't and could have exaggerated bad news or misinterpret their culture or policies.
That said, don't expect Alibaba share price to rocket even if it is included in the Stock Connect.
Let's take Tencent as an example. The was already part of the Stock Connect and the Southbound shareholding is currently only at 7.17%. It is higher than 6.09% a year ago.
There is some growth in Chinese ownership of these home-grown tech stocks but it will take time.
The technical differences of a primary and secondary listing aren't important for investors except one - Alibaba could be included in the Shanghai/Shenzhen-HK Stock Connect.
While you might be having the options of investing globally, Chinese investors do not have that luxury. They are mainly limited to the A-share markets (Shanghai, Shenzhen and Beijing).
Even for Hong Kong listed stocks, the Mainland investors can only invest in those counters included in the Stock Connect program.
Alibaba was excluded in the Stock Connect because it was a secondary listing. Upgrading to a primary listing means it could be added to the Connect and Mainland investors can buy it conveniently.
It is funny to think that one of the most iconic companies and who derived most revenue in China, is not majority owned by the Chinese.
The largest shareholder in Alibaba is Softbank at 25%. Jack Ma only has 2.25%. Apart from the fund houses, 66% is owned by other investors all around the world.
So the tech regulations in China hurt foreign investors more than their local ones.
It might be good that more Chinese investors own Alibaba and other Chinese tech stocks as they are more supportive of their own enterprises as compared to foreigners. The skin in the game might also make the government more apprehensive in implementing harsh measures.
I say this because the CSI 300 which tracks the A-share market (mainly owned by PRC investors) was down by 27% from its peak while the Hang Seng Tech Index (mainly owned by foreign investors) was down by 56%.
This shows that PRC investors were less spooked by what was going on in China as compared to the foreign investors. They live there and they walk the ground. Foreigners don't and could have exaggerated bad news or misinterpret their culture or policies.
That said, don't expect Alibaba share price to rocket even if it is included in the Stock Connect.
Let's take Tencent as an example. The was already part of the Stock Connect and the Southbound shareholding is currently only at 7.17%. It is higher than 6.09% a year ago.
There is some growth in Chinese ownership of these home-grown tech stocks but it will take time.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
relie的铲屎官mommy : appreciate ur post. nice interpretation about Chinese investors and their future prospects
! Learned a lot
103026296 : What does it mean to go public again?
Isn't it already listed in Hong Kong and the United States?