Alibaba share price: Where next after huge Hong Kong IPO?

Alibaba raised an estimated US$11.3 billion in its debut on the Hong Kong bourse, the largest IPO in the city this year. What are the next steps for the company?

The streets of Hong Kong might be quiet in the aftermath of demonstrations, but that hasn’t stopped Chinese internet behemoth Alibaba from having the most resounding of homecoming parties.

On Wednesday (November 26), Alibaba Group Holding Limited (HK)'s much-anticipated listing on the Hong Kong Stock Exchange (HKEX) finally launched, rallying 6.6% to close the trading day at HK$187.60, above the opening price of HK$176.

Alibaba, Asia’s largest publicly traded company by market capitalisation, raised an estimated US$11.3 billion on day one of proceedings. It is Hong Kong’s largest flotation this year, surpassing Uber Technologies Inc (All Sessions)'s US$8.1 billion IPO in May.

Alibaba breaks through key resistance after Hong Kong listing​​

The number, which is in line with initial estimates, could still move north into the region of US$13 billion, if Alibaba decides to utilise an over-allotment option in the next 30 days.

The company’s primary listing on the New York Stock Exchange, where shares are fungible with the Hong Kong-listed shares, also hit a six-month peak closing price of US$194.05, to end an already profitable day on a high.

Alibaba Hong Kong IPO: Taking stock

With the Hong Kong debut going according to plan, Group Chairman and CEO Daniel Zhang said the listing has allowed the company to achieve its long-time goal of returning home.

‘I want to especially thank Hong Kong and the Hong Kong Stock Exchange. As a result of the continuous innovation and changes to the Hong Kong capital market, we are able to realise what we regrettably missed out on five years ago.

‘Today, we realised what we said then: When conditions allow, we will come back to Hong Kong,’ Zhang said in a speech delivered at the HKEX.

Practise trading Hong Kong stocks with an IG Bank demo account now

Source: Bloomberg

Alibaba’s decision to go forward with the IPO surprised many initially, but as Andrew Sullivan, a director at Pearl Bridge Partners, told Bloomberg Television a couple of hours into trading, that this was more of a ‘symbolic’ listing.

‘This is a representation of Alibaba coming back to Hong Kong. They don’t need the money,’ said Sullivan. ‘Coming at this time just after the protests, it underlines that the Hong Kong market is working regardless of what you see outside on the streets.’

Dickie Wong, head of research at broker Kingston Securities, told The Financial Times that the launch was ‘slightly better than expected’, but still ‘definitely a must-have stock for the portfolio of a local investor’.

First day stock take-up rate appeared to reflect this sentiment, as small retail investors took 10% of all shares, after having subscribed 40 times the number of shares allotted.

Next steps for the company

Alibaba said in its prospectus for the IPO that it plans to inject the capital into the further development of its subsidiary platforms, including video streaming site Youku, food delivery service Ele.me, and online travel agency Fliggy.

It will also allocate funds into the research and development of its cloud computing, entertainment, logistics, as well as physical retail business pillars.

For Alibaba, the listing also gives the company more resources to compete with two of its biggest rivals, fellow technology companies Tencent and Baidu.

As it stands, Tencent’s Hong Kong-listed shares fell by 1.0% on the same day of Alibaba’s HKEX premiere. Tencent shares have historically been sold at a higher price than Alibaba shares. As at Wednesday 27 November 2PM Hong Kong time, Tencent shares were priced at HK$334.60 apiece.

Baidu share price also fell US$1.72 to open Tuesday 26 November’s market.

It remains to be seen how the listing prices of all three companies will fare in the coming months. Alibaba, Tencent, and Baidu are among the top ten largest internet companies in the world, and each has a market capitalisation of US$520.50 billion, US$410.60 billion, and US$41.34 billion respectively.

For now, Alibaba hopes to create 100 million jobs over time. In the next five years, it aims to serve over one billion annual active consumers and achieve over RMB10 trillion in annual gross merchandise volume through its China consumer business. Zhang stated in the same speech that the listing establishes a solid foundation for the achievement of these goals.

‘We are also grateful for being part of this era, which is driven by digital innovation. Through the development of the internet and digital economy, we have been granted the opportunity to fulfil our founding mission, “to make it easy to do business anywhere.” We want to use digital technology to help our customers and partners embrace the era of the digital economy,’ said Zhang.


The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.