Chinese e-commerce giant Alibaba Group Holding Ltd. makes a strong debut on the main board of the Hong Kong stock exchange Tuesday with its share price rising 6.59 percent on the first trading day. Ten partners from around the world attend the listing ceremony. Photo: Xinhua

It isn't surprising that the market cheered Alibaba's listing on the Hong Kong bourse on Tuesday by pushing its share price up nearly 7 percent as the Chinese internet giant's IPO was hailed by Chinese observers for injecting a much-needed vote of confidence in the riot-hit city and its financial sector. 

Alibaba's IPO on the Hong Kong stock market, given the unrest going on in the city in recent months, is a strong endorsement of Hong Kong's unshakable role as an international financial hub and as the Chinese mainland's gateway to global financial markets, Chinese experts said.

Alibaba shares jumped more than 7 percent within the first hour of its Hong Kong debut. As of closing time, Alibaba's shares finished at HK$187.6 ($23.99) per share, 6.59 percent higher. 

Alibaba's total market capitalization stood at around HK$4 trillion, making it the most valuable company by market capitalization on the Hong Kong bourse. Second was Tencent, a mainland tech behemoth, whose market capitalization touched HK$3.2 trillion. 

Alibaba's listing marked the biggest equity offering in Hong Kong since 2010 and also the world's largest offering this year, followed by the $8 billion fundraising by Uber in May. In 2014, Alibaba pulled off the biggest-ever IPO on Wall Street, but the company's board never gave up the hope of listing in Hong Kong. 

Founded by Jack Ma Yun in 1999, the Hangzhou-based company has grown into China's largest e-commerce giant with its business including online shopping, finance and offline retail. Ma retired in September.

Persistence paid off with the listing in Hong Kong, hailed as Alibaba's "homecoming" by company representatives, analysts and internet users.  

"Hong Kong, we're ready, we're coming back [home]," said Daniel Zhang Yong, Alibaba's chairman and chief executive, at the listing ceremony on Tuesday, yicai.com reported. 

He added that the Hong Kong listing marked a "new start point" for the tech giant when asked whether Alibaba will further return to the A-share market on the Chinese mainland or seek another listing in London. 

Charles Li, chief executive of Hong Kong Exchanges and Clearing (HKEX), on Tuesday also thanked Alibaba for "coming back home" after five years, according to RTHK. 

"The fact that Alibaba is back on the Hong Kong bourse at a difficult time shows that the Hong Kong capital market is tenacious and has a future," he said.

Chinese internet users applauded and congratulated Alibaba for listing on the Hong Kong bourse. One user posted on China's Twitter-like Sina Weibo platform that "Alibaba had made great contributions to Hong Kong's stabilization."

Another posted "Such a listing could help prop up the Hong Kong stock market and protect the latter from shorting overseas capital."

Ahead of the listing, Alibaba's share issue was oversubscribed. The e-commerce company said Monday that a total of 215,598 valid applications were received, marking the new share as having the largest subscription this year.

Injecting faith 

The return of Alibaba, which can be interpreted as reflecting the tech company's faith in the Hong Kong capital market, is bolstering people's confidence in the city's financial strength at a time of social instability, said Chinese investors and experts. 

Hong Kong's 50-year-old Hang Seng Index has undergone abnormal volatility in recent months amid deepening political unrest and violence that have haunted the city. The index has lost nearly 2,000 points since the beginning of July and stood at 26,914 points on Tuesday, down 0.29 percent. 

"It shows that the Hong Kong stock market is still attractive and that the Chinese mainland still highly values this market, although it's a pretty sensitive moment," said Matthew Chong, a veteran employee at a Hong Kong-based investment institution. 

He said he was bullish about the long-term growth of Alibaba's shares, although the price might fluctuate in the short term.  

Some Hong Kong-based experts also shared the view that Alibaba's listing would inject confidence into the city. 

Liu Yun, a scholar at Hong Kong Polytechnic University, said that the listing placated jolted investors, reaffirming Hong Kong as a sound financial environment while helping boost the Hong Kong stock exchange's global position among major stock exchanges. 

Liao Qun, chief economist at China CITIC Bank in Hong Kong, said that the recent violence and unrest troubling Hong Kong, as well as interference by the US "such as the recent passage of a bill that supports Hong Kong rioters," had given rise to some distrust or worries over whether Hong Kong could maintain its financial strength. 

The instability negatively affected the Hong Kong economy and, to some extent, Hong Kong's stock markets, Liao said. "But Alibaba's listing shows that as long as Hong Kong is backed by the Chinese mainland, the city's role as an international financial hub and as the mainland's gateway to global financial markets won't be shaken." 

Market influence



The listing will also further enhance the global influence of the Hong Kong bourse by attracting more capital, both from overseas and mainland investors, into the securities market, Chinese experts said. 

There's a shortage of new economy companies including internet firms on the Hong Kong bourse, a roadblock to the bourse's appeal to investors, they noted.

But this shortfall would be largely made up by mainland internet giants Alibaba and Tencent listing on the Hong Kong stock market. 

"It can be expected that mainland investors will be passionate about investing in Alibaba after its Hong Kong IPO, considering they are more familiar with the company's influence and the existing stock link programs," Dong Dengxin, director of the finance and securities institute at Wuhan University of Science and Technology, told the Global Times.

"Such investment passion will drive Alibaba's market valuations to a higher level that will in turn attract international investors."

The listing will also help Alibaba hedge against potential risks amid increased US scrutiny of Chinese companies and a brewing trade war, Dong said. 

According to Liao, as the trade war shows no sign of subsiding, the US has been hostile to Chinese companies, especially high-tech firms, and this antagonism might extend to Chinese companies listed in the US. 

"This might be one reason that Alibaba came home: to hedge against US listing risks, and its return might set an example for other US-listed Chinese companies to take similar moves and come back," he said.
Newspaper headline: Alibaba surges on HK IPO