The Listing Of Ali Will Help To Improve Hong Kong Stock Circulation.

Contributing author Julia Hongkong Report

After five years, Ali finally went home.

In November 26th, Li Xiaojia, chief executive of HKEx, told the media after attending the Alibaba listing ceremony: "today is a good day. On the eve of Thanksgiving, Ali came back after many years. When Thanksgiving was very difficult in Hongkong, Ali came back. I felt very relieved.

It is reported that in 2013, the Alibaba initially planned to launch a listing in both the United States and Hongkong, even considering the stricter regulatory requirements of the United States, and the balance of the listing place to Hongkong. But in the end, because the HKEx did not accept the listing of different rights companies at the time, the Alibaba turned to the New York stock exchange in 2014.

For the purpose of Alibaba's listing at this time whether there is a "bailout", Li Xiaojia responded: "this market can not be saved. If the market wants to go down, it will be useless to save." The market is a trading activity. Any transaction involves buying and selling. Some are willing to buy, and others are willing to sell.

In November 26th, Alibaba listed on the day of opening HK $187, closing at HK $187.6, up 6.59% from HK $176, with a turnover of HK $14 billion. On the same day, the Hang Seng Index closed at 26913 points, a slight drop of 0.29%, with a turnover of HK $133 billion 48 million.

Will usher in the stock return tide

After the Alibaba IPO was lost, the HKEx finally decided to open the door to the different companies with the same shares and keep pace with the times to welcome the new economic trend. In April 24th last year, HKEx issued the new IPO regulation, allowing dual equity structure companies to go public and unprofitable biotechnology companies to list in Hong Kong.

Li Xiaojia stressed that he believes that more mainland listed companies will be listed in Hongkong in the future, and that the Hongkong market is ready to enable them to settle down in the city.

"I believe that after such a setback, Ali has come back. There is no reason not to believe that all the companies that should come back will come back. Hongkong will always be here. Today's Hongkong is particularly difficult, but the largest listing since 2010 has happened in such a difficult time, which fully demonstrates the tenacity and the future of the market. He said in a twenty-first Century press report.

Data show that as of June 21, 2019, a total of 367 stocks were listed outside Hong Kong stocks, totaling 1 trillion and 540 billion US dollars, which exceeded the total market value of many developed countries' stock markets. From the perspective of the listed market, the US stock market is the main listing place of the stock market. In the three major exchanges of the US stock market (NYSE, NASDAQ and AMEX market), there were 228 stocks in total, with a total market capitalization of 1 trillion and 510 billion US dollars.

Before that, a few Chinese stocks were returning to the A share market on the path of "privatization overseas - Mainland backdoor listing", but they had to go through a series of complex processes, such as privatization, dismantling the VIE structure, clarifying the relationship between overseas SPV (Special Purpose Vehicle) and equity relations between domestic entities. In contrast, the return to Hong Kong stock market is much simpler. Of course, A shares are also undergoing a series of reforms to attract new economic enterprises to list on A shares.

"The return of Alibaba will have an indicator effect, indicating that Hongkong can provide a platform for these companies to return to the market. At present, the HKEx accepts the listing of companies with different rights and VIE structure. The general listing process takes only 6 months at most. We expect that more than half of China's stock market companies will return to Hong Kong stocks in the second quarter of next year. Xin Yong Zhong partner Lu Hua Ji told reporters on twenty-first Century economic report.

He disclosed that at present, a number of securities firms and accounting firms in Hongkong have already received advice from these stock companies. "The stock taking companies in the US market mainly adopt the same share rights and VIE structure, and if enterprises consider delisting from the United States, more factors need to be considered. Therefore, I believe more stock companies will prefer to go public in both places.

It is understood that the HKEx has been in touch with many listed companies in the US. For such companies, it is mainly between the mainland and the Hongkong market. Listing in Hong Kong can enjoy the advantages of the local market and enjoy the convenience of Hongkong's capital access and freedom. At the same time, the final version of the Listing Rules Amendment also allows the stock option to submit the listing application in a confidential manner.

According to the Listing Rules of the HKEx, overseas listed Greater China Development Limited come to Hongkong for second listing, which must reach at least HK $10 billion and HK $1 billion. The target is mainly innovative industries, which need to be listed on the NYSE, NASDAQ and LSE. Recently, there are good compliance records in the last two fiscal years.

Help to improve Hong Kong stock circulation

Since June this year, the Hang Seng Index has been hovering around 26000 points. The listing of Alibaba is expected to give the Hong Kong stock market a shot in the arm.

"Since Ali's listing and the MSCI quarterly check came into force, it has stimulated more than 130 billion Hong Kong dollars in all day transactions, almost doubled compared to the recent daily turnover of HK $60 billion -700 billion. We expect that the listing of Ali is expected to contribute HK $5 billion -80 daily turnover to Hong Kong stocks, and after the Tencent, Ali listed in Hong Kong to provide investors with more investment strategy options, such as long and short positions between the two companies." Guo Jiayao, chief strategist at Yin Sheng wealth management in China, told reporters on twenty-first Century economic report.

At the same time, Li Xiaojia pointed out that the circulation of Hongkong market has improved significantly. Alibaba, as the leader of the new economic shares, has returned to Hongkong, plus the Tencent holding listed in Hong Kong, which is believed to help Hongkong's capital market develop successfully.

Chen Zhiqiang, chief investment officer of Allianz investment Asia Pacific region, believes that the current valuation of Hong Kong stocks is about a standard deviation lower than the historical average, and the downlink space is limited. If business performance rebounded and China and the United States signed the first stage trade agreement, more new shares will be listed in Hong Kong next year.

Liang Fengyi, executive director of the Hongkong Securities Regulatory Commission, deputy executive director and intermediary agency, has publicly pointed out that although Hongkong as the world's preferred listing place, the IPO fund raising rate in the past 5 years is the highest in the world in 3 years. But in recent years, the listed companies in Hong Kong are mainly small and medium sized new shares. Taking 2016 to 2018 as an example, the proportion of IPO issuing less than HK $100 million is 40% to 50 percent.

She admits that Hong Kong stocks are lagging behind the main market in terms of liquidity. Hong Kong shares have a total market value of fifth in the world, but the average daily turnover is only eighth of the world's total, while the turnover is even thirteenth in the world. Data show that in November, for example, the average daily turnover of 21 stocks in Hong Kong stocks was less than HK $5000.

In addition, whether Alibaba will be involved in the Hong Kong Stock Exchange and allow mainland investors to participate, Li Xiaojia pointed out that it depends on the market share holders of mainland regulators, exchanges and indices, but believes that as a common resident of the mainland, a great company will eventually be able to enter Hong Kong stocks.

According to the twenty-first Century economic report, the Hong Kong stock qualifying shares are mainly entered into Hengsheng composite index stocks, and overseas companies, shares and different rights structure companies are excluded.