Bloomberg Businessweek - USA (2019-06-17)

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June

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Alibaba’s$25billiondebutontheNew

YorkStockExchangein 2014 was,at

thetime,thelargest-everinitialpublic

offeringintheU.S.Withthecompany

said to be planning to raise $20 billion

from a secondary stock offering in Hong

Kong, the operators of America’s top

exchanges should be worried that busi-

ness from China will start to dry up.

Alibaba Group Holding Ltd. isn’t

deserting New York, which will remain

its primary listing. But it plans to add

one in Hong Kong, people familiar with

the matter say, signaling to other Chinese companies that

they have IPO options closer to home. (Alibaba hasn’t said

whether it plans a Hong Kong listing.)

Businesses without a three-year track record of profitabil-

ityarestillprohibitedfromlistingonChineseexchanges.But

a soon-to-be-launchedShanghaimarketwillallowmoney-

losing tech plays to be listed, and in April 2018, Hong Kong

changed its regulations to allow unprofitable tech compa-

nies to list in the city. It also scrapped a strict one-share-one-

voterulefortechstocks,leadingtomega-IPOsbyChinese

smartphoneoperatorXiaomiCorp.,whichraised$5.4bil-

lioninJuly,andfood-delivery giant Meituan Dianping, which

raised $4.2 billion ahead of its September debut. The issues

helped make Hong Kong the world’s top IPO venue last year.

BeijinghasneverbeenhappythatAlibaba,China’smost

valuablecompany,is publiclytradedintheU.S.,andAlibaba

isn’ttheonlyChinesecompanywanting to reduce its expo-

sure to U.S. investment: Semiconductor Manufacturing

◼ LAST THING

With Bloomberg Opinion

By Nisha Gopalan

Hong Kong Nips at New York,

Thanks to Alibaba

InternationalCorp.,a bigchipmaker,said

attheendofMaythatit plannedtodelist

in New York because of its paltry trad-

ing volume there—the stock is also listed

inHongKong—butwithtradetensions

mountingbetweenChinaandtheU.S.,

thetiminghardlyseemscoincidental.

EarlierinMay,DouYu International

HoldingsLtd.,a Chinesevideogamelive-

streaming platform, delayed its U.S. IPO.

Even before the trade war heated up,

Chinese companies were being blocked

from expanding in the U.S. Alibaba’s

attempt to buy MoneyGram was halted on national security

grounds in early 2018; in April, the Committee on Foreign

Investment in the U.S. ordered the dating app Grindr’s

Chinese owners to sell the company by 2020.

That’s not to say that the U.S. will see a precipitous

drop in Chinese listings anytime soon. No country has

deeper capital markets than the U.S., or a larger base of

analysts who understand tech stocks. But New York and

Nasdaq should be worried. There are 173 Chinese compa-

nies worth $758 billion with primary listings in the U.S.,

accordingtoBloombergdata.HongKongregulationssay

thatif morethan55%ofthetradingofa China-basedcom-

pany’sstockis inthecity,thenit becomesa dual-primary

listing rather than a secondary one. With Hong Kong read-

ily accessible to Chinese investors, it’s fairly likely Alibaba

will hit that mark. At that point, would a presence on the

New York exchange be more trouble than it’s worth? <BW>

�Gopalan is a finance columnist for Bloomberg Opinion