SHANGHAI: Investors betting on Alibaba Group Holding Ltd’s inclusion in a programme allowing mainland Chinese investors to buy its shares in Hong Kong could be in for a disappointment.
China’s largest e-commerce company, valued at HK$4.56 trillion (US$587bil) in Hong Kong, can’t be included in the stock connect program linking the Asian financial hub with Chinese investors at present, according to people with knowledge of the matter, who asked not to be identified as the discussions are private.
The exclusion of companies with secondary listings and weighted voting rights from the program was part of an arrangement agreed to by the mainland and Hong Kong exchanges before Alibaba’s Hong Kong debut last year, the people said.
The Shanghai, Shenzhen and Hong Kong exchanges haven’t agreed to make an exception or revise the agreement for Alibaba, though that could change in the future, they said. With the bourses competing to draw the listings of local firms already floated in the US, allowing companies in Alibaba’s position into the program would run contrary to Beijing’s ambitions of developing its mainland exchanges, particularly as unrest grips Hong Kong.
Other Chinese firms - among the country’s largest corporations, from JD.com Inc. to Baidu Inc - may then be encouraged to also pick Hong Kong, bypassing the Shanghai or Shenzhen bourses.
The Hong Kong Stock Exchanges & Clearing Ltd has proposed changes to the China Securities Regulatory Commission, which hasn’t yet made a decision to revise the previous arrangement, one of the people said.
Companies with weighted voting rights and a secondary listing are not currently included in the stock connect and there’s been no precedent for such a move, a Hong Kong Exchange spokesman said in response to questions on the agreement. — Bloomberg
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