Asia Capital Markets Research

Alibaba's secondary share listing in Hong Kong is back on track and now set for late November. The Chinese e-commerce giant eschewed Hong Kong for New York when it first went public in 2014, to the disapproval of some in Chinese officialdom. The Hangzhou-based company has been planning a secondary listing in Hong Kong to fund large-scale expansion plans. Those plans were put on hold amidst the worst political instability to hit Hong Kong since the late 1960s.

While the protests have yet to abate, Alibaba is ready to go ahead with its Hong Kong IPO anyway, with a probable date of November 26. The IPO is expected to raise up to $13.4 billion, analysts say. A draft prospectus reviewed by Reuters shows that Alibaba plans to use the money to invest in e-travel group Fliggy, Ele.me, an online delivery and local services platform, and YouKu, a Chinese variation of YouTube.

Hong Kong has had a tough year. Following more than four months of protests, the city's economy slipped into recession for the first time in a decade in the third quarter, contracting 3.2% in the July-September period compared to the quarter ended June 2019. The political instability shows no signs of easing either.

Yet, Hong Kong has led the world in initial public offerings since early September. Data compiled by Bloomberg show first-time share sales on the Hong Kong Stock Exchange are US$7.9 billion since September 1, ahead of the Nasdaq's US$7 billion and the New York Stock Exchange's US$3 billion. Anheuser-Buschs's US$5.8 billion IPO of its Asian unit accounted for the lion's share of new Hong Kong listings.

Alibaba's expected Hong Kong listing was supposed to be a grand homecoming. After all, the company's $21.8 billion 2014 NYSE listing - at the time the largest global IPO ever - disappointed some folks in Chinese officialdom who hoped China's biggest e-commerce firm would go public closer to home. Since the HKSE revised its rules last year to allow dual listings, there has been much speculation about Alibaba listing in Hong Kong.

In August, international media reported that Alibaba would suspend plans to list its shares in Hong Kong. The stock offering, which was expected to raise US$10-15 million had been scheduled for late August, according to a recent New York Times report. The deal could well have been the largest of the year and the top follow-on share sale in seven years. Alibaba nixed plans to list its shares in Hong Kong because of ongoing protests in the city and associated instability, the report said.

At first blush, Taiwan has taken a major step forward in its acceptance of virtual currency by issuing regulations specifically for security token offerings (STOs), rather than requiring them to abide by existing securities laws. Taiwan's Financial Supervisory Commission (FSC) announced the new regulations in late June and expects to implement them as early as October. The FSC says that the new regulations will benefit startups seeking non-traditional fundraising sources.

The launch of the Shenzhen-Hong Kong Stock Connect on December 5, 2016 was an important next step in the liberalization of China’s capital markets. The platform will offer a new opportunity for foreign firms to access the Chinese capital markets through the Shenzhen Stock Exchange, which is prominent for its technology stocks and exhibits higher returns than the Shanghai Stock Exchange, partly because its listed companies are newer and smaller.

Earlier this month, Zhongrong International Trust became China’s first issuer of offshore bonds, beginning the Chinese trust industry’s venture into international capital market. This exemplifies the great expansion the Chinese trust industry has experienced in recent years.

The shares of three companies recently experienced an unprecedented slump, which nobody can precisely explain.

With the Taiwan - Singapore now on track for year end, we are seeing a tremendous uptick in cross-border trading efforts, but instead of M&A, exchanges are focusing on trading links

The Singapore Exchange (SGX) has plans to launch a FTSE China A50 Index Futures option product if / when it is approved by the China Securities Regulatory Commission (CSRC). While the new product name can be confusing for those who don’t follow Asian stock and derivatives markets closely, it simply means that investors in the region will have a hedging tool for the rollercoaster stock markets of China. Up more than 40% since November last year, the stock market dipped several times in January. Since the Shanghai-Hong Kong Stock Connect launched, the attention on Chinese A-shares has been unprecedented and additional investor interest should drive demand for exposure and hedging tools.

The PBOC has issued implementation rules for RMB cash pooling in China, which will facilitate cross-border RMB sweeping for multinationals, previously restricted to the Shanghai Free Trade Zone (FTZ).

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