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Alibaba’s Potential Chinese IPO Could Send Share Prices Soaring

Alibaba Group, the Chinese technology and eCommerce giant led by Chairman Jack Ma recently announced that they had plans to launch an IPO for the Chinese market. Financial analysts are bullish on Alibaba’s share price, predicting as much as a 11 percent in growth over the next few months.

Alibaba To List On Shanghai Stock Exchange

Alibaba first went public in 2014 to a record-setting $25-billion initial public offering (IPO) on the New York Stock Exchange (NYSE). Since their listing, the company has grown its operations and size significantly.

TechCrunch

Over the last 12 months alone, Alibaba’s value has risen 86 percent, closing Wednesday with a market capitalization of about $495 billion.

According to an insider report by The Wall Street Journal on Thursday, Chinese e-commerce and technology giant Alibaba Group is planning to dual listing on the Shanghai Stock Exchange once all approvals are obtained from financial regulators. The company expects to proceed with the Chinese IPO as early as this summer.

After the report, the share prices for Alibaba on the NYSE saw a 3.5 percent boost of up to $200 per share by mid-day. Analysts believe that the share price will continue to increase in the coming months and hit the $226 per share mark. On top of the potential Chinese listing, analysts are fueling the growth curve with revenue growth predictions for 2018 going up to 70 percent.

China To Make Rule Changes To Allow Alibaba Listing

While Alibaba has its headquarters in China, the company is registered and incorporated in the Cayman islands. This prevents the company from listing on the Shanghai Stock Exchange. But things could soon change for Alibaba and the Chinese stock exchanges.

Along with the news of Alibaba’s planned homecoming listing, Yan Qingmin, vice chairman of the China Securities Regulatory Commission, said that China is launching China depositary receipts (CDRs) “very soon”. According to sources, the guidelines for the CDRs will follow receipts issued in the US and are expected to be finalized during the second half of the year.

The release of CDRs is the key to allowing foreign-registered companies like Alibaba to allow domestic investors to hold shares listed elsewhere. This is good news for domestic investors who are looking to invest in Chinese tech firms that are listed outside the mainland such as the Hong Kong-listed Tencent and Nasdaq-listed Baidu.

Apart from Jack Ma, other Chinese business leaders have voiced their desire to list in China once current rules are amended. Tencent’s Pony Ma, Baidu Chairman Robin Li, JD.com Chairman Richard Liu have all expressed interest in launching IPOs in China.


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