Editorial : Alibaba's IPO

【明報專訊】THE anti-amendment storm has gone on for months and has dealt a heavy blow to Hong Kong's real economy. But the situation is very different in the capital market. Alibaba is to launch its IPO in Hong Kong, and its retail portion has been 40 times oversubscribed. In other words, it is to become the biggest IPO in Hong Kong in nine years.

It is estimated that up to HK$100 billion will be raised in the Alibaba IPO, thus making it the third biggest IPO in Hong Kong history. As the anti-amendment storm drags on and the Hong Kong economy is in recession, the turmoil in society has no end in sight. It was once rumoured that Alibaba would suspend its secondary listing plan in view of the situation in Hong Kong. Alibaba's decision to go ahead with the IPO can no doubt be seen as a vote of confidence in the future of Hong Kong and can be viewed as a kind of support for Hong Kong's status as an international financial centre. However, it has to be said that Alibaba is concerned about the developmental needs of itself. Its plan to raise funds cannot be delayed further. Furthermore, as Washington could act to suppress Chinese corporations listed in the US, Alibaba could diversify the risk by its secondary listing in Hong Kong.

In the era of globalisation, there can be a world of difference between the world of financial elites and the real economy or the social situation. Over the past few years, the anti-globalisation and anti-elite waves in Europe and the US have, to a certain extent, reflected the incongruity. Hong Kong is no exception. The Sino-US trade war and anti-amendment storm have put Hong Kong's real economy under immense pressure over the past half year. But there has been limited effect on the capital markets. Between June and October alone, US$14.767 billion was raised in Hong Kong IPOs, making Hong Kong the most active capital market in the world again.

New York, London and Hong Kong are the three biggest financial centres in the world. Each of them has a different footing and is a magnet for capital of their respective regions and even the world. In Asia, Hong Kong's capital market is larger in scale than Singapore's and more internationalised than Tokyo's. Mainland corporations choosing to become globalised find it natural to raise capital in Hong Kong. This is why Hong Kong, which does not have a thriving internet economy, is a place where premium technological companies from the mainland such as Tencent, Alibaba, Meituan Dianping and Xiaomi are clustered. Being listed in both Hong Kong and the US is also beneficial to Alibaba's developmental strategy of globalisation.

For Hong Kong's capital market, it will be the best thing if Alibaba's decision to go public in Hong Kong can encourage more strong corporations from the mainland to choose Hong Kong rather than New York as the first choice for their IPOs. Some investors even expect that Hong Kong stocks will rise significantly when the anti-amendment storm is over, just as they did in the aftermath of the 1967 riots and 2003 SARS epidemic. However, the fanfare accompanying Alibaba's IPO does not have a clear relationship with Hong Kong's real economy. Those who make a judgement on Hong Kong's future based on Alibaba's IPO could be grossly mistaken.

Hong Kong's economic resilience is under unprecedentedly immense challenge. It remains uncertain whether there will be a swift recovery. We cannot take it for granted that Hong Kong's status as an international financial centre will be as solid as a rock in the long term.

明報社評2019.11.22:「阿里」招股旺場冲喜 港金融中心地位有憂








a magnet (for sb/sth) : a person, place or thing that sb/sth is attracted to

mistaken : wrong in your opinion or judgement

as solid as a rock : having a very strong basis

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