Alibaba Group Holding Co.'s (BABA) - Get Report shares edged higher Thursday following multiple media reports that the online retailing giant has filed for a Hong Kong listing that could be worth as much as $20 billion.
Reuters reported the listing could come as early as the third quarter of this year, while Bloomberg added that China International Capital and Credit Suisse will steer the secondary offering, the biggest follow-on share sale in at least seven years. Alibaba floated on the New York Stock Exchange in 2014, raising $25 billion in what remains the world's biggest IPO some five years later.
Alibaba shares were marked 0.6% higher in pre-market trading Thursday, indicating an opening bell price of $160.04 each, a move that would extend the stock's year-to-date gain to around 16.75%.
Alibaba's move to list in Hong Kong could reflect concern for the fate of Chinese companies doing business with, or having capital ties to, the United States as it presses hard for changes to its current trade agreement with Beijing.
China-based firms have flocked to the U.S. market to raise equity capital since Alibaba's blockbuster IPO in 2014, with 33 listings worth $9 billion last year and 2019 pace that could see over 40 companies debuting before the end of the year.
Luckin Coffee Inc. (LK) - Get Report debuted on the Nasdaq stock exchange with an IPO that valued the China-based rival to Starbucks (SBUX) - Get Report at more than $4.2 billion, but chipmaker SMIC said it would de-list its U.S shares and place them on the Hong Kong market instead.
Last month, former White House adviser Steve Bannon, a noted hawk on U.S.-China relations but nonetheless an influential voice in certain Republican party circles, told the South China Morning Post that "the next move we make is to cut off all the IPOs, unwind all the pension funds and insurance companies in the U.S. that provide capital to the Chinese Communist Party."
"We'll see a big move on Wall Street to restrict access to capital markets to Chinese companies until they agree to] this fundamental reform," he said.
Around 160 Chinese companies are listed on U.S. exchanges, according to the U.S.-China Economic and Security Review Commission -- including Alibaba, Baidu (BIDU) - Get Report and JD.Com (JD) - Get Report -- with around 11 of those having at least a 30% stake owned by the Chinese government.
Recent moves by the White House to restrict the ability of China-backed Huawei Technologies from doing business with the Untied States, while simultaneously pressuring its international allies to shut it out of 5G network construction contracts going forward, has created significant tension between Washington and Beijing.
It's also raised the prospect of both reprisals from the Chinese government and a "tech cold war" that could add further uncertainty to companies attempting to lever production and exports between the world's two biggest economies.
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