Top Story

Alibaba Hong Kong Listing Pop Sizzled Out

Alibaba’s secondary listing (9988 HKG) in Hong Kong has started out on a strong footing today where it has rallied to a high of HK$189.50 from its listing price of HK176.00; an intraday again of 7.67%.

Its secondary listing on the Hong Kong stock exchange (HKEX) has raised at least HK$ 92 billion (US$11.3 billion), marking it the world’s largest stock sale so far, ahead of Uber’s US$8.1 billion IPO and US$5.7 billion IPO for Anheuser-Busch InBev’s Asian brewing business in Hong Kong. Also, Alibaba’s secondary listing amount could climb to as much as US$12.9 billion if it chooses to exercise an over-allotment option within 30 days of the start of trade.

Interestingly, the “initial pop” has started to sizzle out towards the end of today’s trading session in Hong Kong where it closed at HK$187.60 (still a 6.6% gain from listing price) which also represents a small premium of 0.64% over its U.S. NYSE listed ADR (BABA) based on yesterday closing price of US$190.45 (8 Alibaba’s HK shares = 1 ADR in NYSE).

Alibaba HK (9988 HKG) – Closed near its intraday low


What does it mean for BABA listed in NYSE? (skeptical on the bullish breakout)


click to enlarge charts

  • The unique feature of Alibaba’s secondary listing is that both the Hong Kong and New York stocks are fungible where investors can buy and sell the same shares on either exchange. For example, a trader can establish a long position in New York and closed the initial long position in Hong Kong.
  • Yesterday’s price action of BABA can be considered as bullish if seen from a price action perspective where it has rallied by 1.96%, outperformed both the S&P 500 (0.75%) and Nasdaq 100 (1.21%) and broke above a descending resistance from its 211.70 all-time high printed on 05 Jun 2018.
  • However, it we consider today’s oversubscribed secondary listing in Hong Kong and the fungibility nature of its shares. Yesterday’s push up in BABA may be driven by short-term traders that are eying for an intraday gain by establishing long positions on NYSE and squaring/closed out their overnight U.S. positions when the Alibaba starts trading in Hong Kong today.
  • Thus, we are skeptical on yesterday’s bullish breakout seen in BABA where it can be driven by short-term profit-seeking mentality to take advantage of its oversubscribed secondary listing.   
  • We prefer to have a neutral stance on BABA for now between 195.13 (a medium-term ascending channel resistance from 31 May 2019 low, swing high areas of 09 Jul/03 May 2019 & a Fibonacci expansion cluster) and 178.96. Bears need see a breakdown below 178.96 for a potential multi-week decline to target the major range configuration support zone at 161.90/155.00. On the flipside, a daily close above 195.13 opens up scope for a further rally to retest its all-time high at 211.70.
  • On the macro front, U.S-China trade related issues and continuation of social unrest in Hong Kong can also dent the optimism in BABA. In today’s earlier Asia session, repetitive optimistic trade deal headline from one of China official media, Xinhua has muted effect where the Hang Seng Index (HSI) and China A50 have erased earlier intraday gains. The HSI has ended today’s session with a modest loss of -029% while China A50 closed almost unchanged.

Charts are from eSignal 

Related analysis:

Alibaba HKD88 billion listing may not be so auspicious for BABA

Why Alibaba’s HK launch dips for victory




Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

OPEN AN ACCOUNT