9988. This is the code used by Alibaba to list in Hong Kong. In Chinese, the number symbolizes "eternal prosperity" and given the trend shown by the stock in the first two sessions on the Asian list, it seems that the choice brought luck: +6,59% at debut on November 26, +2,99% on following. In just two sessions, the share price rose from $176 (issue price) to $193,2 approaching that of the stock listed on Wall Street which in turn proceeds at full speed, gaining more than 4% to 194,7 dollars since the beginning of the week.
Indeed, for the Chinese e-commerce giant, Hong Kong is a secondary listing, also told with a bit of romance given that in this case it is the domestic market (although Hong Kong was preferred to Shanghai) and that the square is not experiencing an easy period, shaken by pro-democracy demonstrations (and against Beijing) who have been here for 5 months spreading chaos in the city. The first IPO of the technology group, described as "the largest in history", was in New York on 19 September 2014. At the time, Alibaba raised 25 billion dollars, today it will have to "settle" for 11,3 billion (rising to 12,9 ,XNUMX with the exercise of greenshoe), taking itself pending the landing on the Aramco Stock Exchange the scepter of the most IPO of 2019, ahead of Uber (8,1 billion) and Bud Apac (5,7 billion).
At this point, the question many investors are asking is: "If you want to focus on Alibaba, is it better to invest in Hong Kong or Wall Street?". In the USA, Alibaba has a capitalization of 512,67 billion dollars and in 2019 it is the fifth most traded stock overall, with average daily volumes of 2,6 billion (Refinitiv data). If New York therefore represents a "certainty", Hong is still a gamble, even if the debut bodes well for the future: 74,5 million shares were traded on the first day, over 53 million on the second.
Deciding which of the two markets to invest in will therefore be fundamental. FIRSTonline consulted some financial analysts to understand which factors to take into consideration to make the right choice. Three bases to start from: the economic-political dynamics that influence the performance of the two indices, the currency on which to bet and the technical aspects to consider.
“When securities are listed on more than one market, the price differences are minimal because arbitrageurs intervene to compensate for them, simply by speculating on the time differences determined by the time zone. Between New York and Hong Kong the fundamentals of the stock are the same, as are the rights, the price will therefore tend to level out in a short time”, explain the analysts. “The real decision to make concerns the currency: investors will have to choose whether to invest in Hong Kong dollars or in US dollars”, since exchange rates can have a huge impact on any capital gains deriving from the investment.
To consider also that geopolitical dynamics ongoing - from the Hong Kong crisis to the war on tariffs, passing through President Donald Trump's aversion to Chinese companies - have an impact on both the stock market and the currency market, so carefully weighing which currency to expose yourself to is of primary importance importance, as well as deciding whether to “treat what happens as a risk or as an investment opportunity”.
Other factors to take into consideration when deciding whether to invest in Alibaba stock on Wall Street or in Hong Kong are then the cost of the transaction and the tax. “It can be different for an investor to buy a security in Hong Kong or in the USA because commissions are higher in one or the other or because one market is more convenient for tax purposes than the other”. Purely technical choices which, however, at the end of the year can determine the trend of the investment.
In both cases, the basis, namely Alibaba, remains more than solid. After all let's talk about a company with 54,5 billion in revenues and 700 million users which boasts absolute dominance over Chinese e-commerce, where it controls over 60% of the market.
