Alibaba seeks dual listing in Hong Kong: Time to explore BABA stock?

Highlights:

• Alibaba said that its board has approved its plan for Hong Kong primary listing.
• Its listing is expected to occur in 2022.
• Currently, it has a secondary listing on the HK exchange.

US-listed shares of Alibaba Group Holding Limited (NYSE: BABA) have been climbing after the e-commerce company announced on Tuesday, July 26, that its board has approved its plans for a primary listing in Hong Kong (HK).

If this listing happens, the tech juggernaut is set to become a dual-listed company in Hong Kong. Currently, it has a secondary listing on the HK exchange and its American Depositary Shares (ADS) trade on the New York Stock Exchange (NYSE).

The listing is expected to occur in 2022. Alibaba also noted that in case its primary listing in Hong Kong goes through, its ADSs in the US and Hong Kong Exchange-listed shares would be convertible, meaning investors could hold their shares as ADSs on NYSE or as ordinary shares that would be traded in HK.

Alibaba (NYSE: BABA) stock performance

BABA stock rose 3.9 per cent to US$105.00 at 8:31 AM EST on Tuesday, July 26. Although the stock traded in red this year, losing 14.92 per cent year-to-date (YTD), it gained 17.73 per cent in the last three months.

Its five-day average volume is about 19 million, and its 30-day average volume is around 26 million. The US$272.86-billion market cap company has a Relative Strength Index (RSI) of 42.07, suggesting that the stock is highly volatile at the moment.

Alibaba's latest financials

Alibaba posted revenue of RMB 204.05 billion (US$32.18 billion) in the quarter ended on March 31 this year, signifying an increase of nine per cent year-over-year (YoY).

The company's net loss was RMB 16.24 billion (US$2.56 billion) in the latest quarter, while its net loss was comparatively less in the year-ago quarter.

Source: ©Kalkine Media®; © Canva Creative Studio via Canva.com

What's next for Alibaba stocks?

Some experts believe that the dual listing could draw the attention of certain investors, especially those in Asia as Alibaba has its main business in Greater China.

Alibaba, which presently maintains a secondary listing in Hong Kong, noted in a filing that its average daily trading volume in Hong Kong was around US$0.7 billion in the first half of 2022. However, it pointed that the number was relatively less than that of US$3.2 billion in the US for the same period.

Some experts believe that the primary listing could help Alibaba in seeking involvement in the Stock Connect Link with the exchanges of Shanghai and Shenzhen. 

Through this, the Hangzhou, China-based e-commerce firm could expand its investor base. However, BABA stock appears to be volatile at the moment, as evidenced by its RSI, and investors should closely evaluate the market condition.