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Hong Kong Protests Force Alibaba To Delay Its Huge Listing In The City: Reuters


08/21/2019


Hong Kong Protests Force Alibaba To Delay Its Huge Listing In The City: Reuters
The growing political unrest in Hong Kong is possibly the reason that has driven China’s biggest e-commerce company Alibaba Group Holding Ltd to delay its planned and announced listing in the city’s stock exchange for a value of up to $15 billion, claimed a report published by the news agency Reuters.
 
Investors and the global financial community wants to get a clear idea about the business environment in the Chinese-controlled territory and is therefore closely watching the Hong Kong-listing plans of Alibaba. According to analysts, it would also provide a reading of the situation for China.
 
The Reuters report said that Alibaba could potentially launch the deal as early as October even though there has been no formal setting of a new timetable. The report claimed that the company still wants to raise funds of up to $15 billion but it would also depend on the political tensions in the city and on the market conditions becoming more favorable.
 
The report cited sources claiming that a board meeting before Alibaba’s earnings release last week decided the postponement of the listing which was slated to be launched in late August.
 
The report quoted further sources claiming that the lack of financial and political stability in Hong Kong was the reason of the delay. There have been political protests for 11 week at a stretch in the city that is considered to be the Asian financial hub. Some of the protests, which started off being non-violent, have turned out to be violent which has caused disruptions in the city. The violence was such that the police have been forced to fire more than 1,000 rounds of tear gas and more than 700 protesters have been arrested. Last week there was a complete shutdown of the city airport by the protesters.  
 
Last week, the benchmark Hang Seng index of Hong Kong dropped to a seven-month low.
 
“It would be very unwise to launch the deal now or anytime soon,” the first person said. “It would certainly annoy Beijing by offering Hong Kong such a big gift given what’s going on in the city,” said the Reuters report quoting a source.
 
It has been quite some time that Alibaba had been preparing for the listing which would be the largest equity listing for the current year so far and is slated to also be the biggest follow-on share sale in seven years.
 
The report also claimed sources saying that the Hong Kong deal, according to Alibaba, was a way to “diversify its access to capital markets” but is not seen by the company to be at the core of its business. Alibaba “does not see the postponement as a blow”, the source said to Reuters.
 
On the other hand for the Hong Kong stock exchange, the listing of Alibaba would be a big deal. This is so because it is currently running behind its rivals in New York in terms of annual values of deals and in the race for the largest exchange for the year.
 
(Source:www.reuters.com)


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