Alibaba has gained greater freedom

Ten years ago, Alibaba made its debut on the New York Stock Exchange, breaking the global IPO financing record with a financing amount of $25 billion and becoming the highest market value internet company in China. Ten years later, Alibaba aims to continue its new capital myth.

On August 28th, Alibaba completed its dual primary listing in Hong Kong, making it a company listed on both the NYSE and the HKEX.

After the completion of the listing in Hong Kong, Alibaba gained greater freedom in the capital market.

Alibaba has independent pricing power for its Hong Kong shares, without having to follow the US stock market. With the potential inclusion of Alibaba in the Stock Connect program in the future, investors from mainland China and other Asian regions will have a richer channel to invest in Alibaba. Alibaba can also enjoy a liquidity premium and achieve valuation revaluation.

Of course, Alibaba is also working hard to reassure investors with its performance. Facing competitors such as Pinduoduo and Douyin, Alibaba's counterattack is resolute, with Taobao's growth returning to double digits and a focus on improving profitability. Alibaba is approaching the e-commerce industry with a zero-based mindset to recreate the capital feast of the past.

However, the e-commerce industry has bid farewell to the high-growth stage, and Alibaba is destined to face a tough battle.

Formal Return

After eleven years, Alibaba finally succeeded in listing on the HKEX.

Hong Kong was once Alibaba's first choice for listing. In September 2013, Joseph Tsai, then the co-founder and vice chairman of Alibaba Group, stated in an open letter that as a company with its main business in China, Hong Kong was naturally Alibaba's preferred listing location.

However, at that time, Alibaba's partnership system did not comply with the "one share, one vote" principle of the HKEX, so Alibaba ultimately chose to list in the US. Missing out on the Alibaba IPO became one of the most unforgettable things for Charles Li, the former CEO of the HKEX.

Nevertheless, Alibaba never gave up on listing in Hong Kong. As early as 2019, Alibaba landed on the HKEX in the form of a secondary listing. In July 2022, Alibaba announced that it planned to add Hong Kong as its primary listing location. However, this plan was interrupted for some reason.

For Alibaba, completing a dual listing in Hong Kong now holds significant meaning.

A secondary listing involves the same type of stock listed in two different markets, essentially allowing the stock to circulate across markets without being restricted by the rules of the primary listing location. This dual listing for Alibaba is equivalent to an independent issuance and listing according to the rules of the Hong Kong market. Alibaba will not affect its listing status on one exchange by delisting from another, and its stock price will be more independent.

A senior executive from a foreign investment bank also told Wall Street News that some investors had withdrawn from Chinese concept stocks such as Alibaba due to policy risks. In the past few months, international funds from Europe and Asia have returned to the Hong Kong market, considering or already joining the Hong Kong stock market.

The executive mentioned that large companies like Alibaba listing in Hong Kong can further boost investors' enthusiasm for the Hong Kong market and increase market trading activity.

Wall Street News also learned that most of Alibaba's public float shares have been transferred to Hong Kong, and in terms of market value and trading volume, Alibaba has consistently ranked among the top three in the Hong Kong stock market.

Although Alibaba's dual primary listing in Hong Kong does not involve new stock issuance and financing, the market's expectation is that after completing the dual primary listing in Hong Kong, Alibaba is expected to be included in the Stock Connect program in September The Stock Connect allows mainland Chinese investors to buy and sell stocks listed on the Hong Kong Stock Exchange. Being included in the Stock Connect means that mainland Chinese investors will be able to directly invest in Alibaba's stock through the Stock Connect.

CICC believes that Alibaba has already met most of the requirements for inclusion in the Stock Connect. If the company successfully completes the dual primary listing conversion by the end of August, it is expected to meet all necessary conditions before the Stock Connect inspection day on September 5th, and may be included in the adjustment around September 9th.

Morgan Stanley anticipates that after being included in the Stock Connect, in the long term, the proportion of southbound funds holding shares may stabilize at over 10%, providing significant incremental support to the company's value. Based on Alibaba's current market value of HKD 1.55 trillion, theoretically, this could bring in an incremental capital of HKD 155 billion, which will help enhance Alibaba's stock liquidity and valuation, benefiting the company's market value management.

Through the dual listing, Alibaba's stock liquidity will significantly increase, and the shareholder structure will further diversify. It will also enable the company to return to its peak after breaking through in both the capital market and business.

Taking Initiative

Over the past thirty years, with the development of the Chinese economy, Chinese concept stocks have also experienced a "great navigation era", with Alibaba undoubtedly being the most representative.

On September 19, 2014, Alibaba was officially listed on the New York Stock Exchange. After a long inquiry process, Alibaba's stock opened at $92.70, with a total market value of $238.3 billion, surpassing Tencent to become China's largest internet company, second only to Apple, Google, and Microsoft. Jack Ma, with Alibaba's transaction volume already exceeding trillions, attracted worldwide attention.

However, Alibaba's capital myth did not last, as it was soon surpassed by the rising star Pinduoduo. On November 30, 2023, Pinduoduo's market value reached $195.887 billion, surpassing Alibaba for the first time, becoming the largest Chinese concept stock in the U.S. stock market, overturning Alibaba's position as the king.

To boost confidence in the capital market and demonstrate Alibaba's business value, Alibaba, with a mindset of starting anew, embarked on a new capital journey.

In March last year, Alibaba initiated a major restructuring plan, the largest in history, splitting into six parts. Alibaba Group's positioning changed from a group company engaged in business operations to a group holding company engaged in capital management, with the sole purpose of creating more value for shareholders.

For this purpose, Alibaba established a Capital Management Committee under the group's board of directors to manage various major capital matters. However, with the listing plans of Alibaba Cloud, Cainiao, and Hema temporarily shelved, Alibaba's capital management plan did not proceed smoothly.

Subsequently, Alibaba took a series of actions to boost confidence in the capital market from a market value management perspective.

In December last year, Alibaba announced a dividend distribution for the 2023 fiscal year, totaling approximately $2.5 billion (around RMB 18 billion), the third and largest dividend distribution in Alibaba's history. After 13 years, Alibaba resumed dividend distribution, showing humility and attracting investors with concrete actions.

During the 2024 fiscal year full-year earnings conference call, Alibaba announced that the board had approved an annual cash dividend of $1 per American depositary share for the 2024 fiscal year, as well as a special one-time cash dividend, with the total amount of cash dividends for the 2024 fiscal year totaling approximately $4 billion At the same time, Alibaba has also implemented a buyback strategy. According to Alibaba's first quarter report for the 2025 fiscal year, Alibaba repurchased a total of 613 million common shares at a total price of $5.8 billion. As of June 30, 2024, Alibaba had 19 billion outstanding common shares, a net decrease of 2.3% from the previous quarter, with $26.1 billion of the share repurchase plan still unused.

Jack Ma has also started to speak out frequently and has expressed his confidence in Alibaba's future development through practical actions.

At the end of last year, on the eve of Alibaba being surpassed by Pinduoduo in the market, Jack Ma posted on the internal network, stating, "I firmly believe that Alibaba will change and improve." In April this year, on the one-year anniversary of Alibaba's reform, Jack Ma wrote an article affirming the new management represented by Joseph Tsai and Eddie Wu, stating that Alibaba has returned to a healthy growth track and supporting continued reform.

At the beginning of the year, information about Jack Ma and Joseph Tsai significantly increasing their holdings of Alibaba stock was disclosed. In the fourth quarter of last year, Jack Ma purchased $50 million worth of Alibaba's Hong Kong-listed shares, while during the same period, Joseph Tsai, through his Blue Pool Management family investment tool, purchased around $151 million worth of Alibaba's U.S.-listed shares.

Even earlier, Jack Ma's shareholding percentage had already surpassed SoftBank, once again becoming Alibaba's largest shareholder. After nearly 20 years, the position of Alibaba's largest shareholder has returned to the hands of this founder.

Now, Alibaba has officially returned to the Hong Kong stock market, which will greatly improve Alibaba's stock liquidity, and this is also part of Alibaba's capital management plan.

Ultimately, for Alibaba to recreate the capital market feast, it needs to return to business logic and impress the capital market with performance.

Currently, it appears that Alibaba is moving in the right direction. According to the first quarter financial report for the 2025 fiscal year, Taotian this quarter saw a high single-digit year-on-year growth in online GMV and a double-digit year-on-year growth in order volume. Alibaba's CEO, Eddie Wu, believes that Alibaba's strategy has worked, Taotian Group has stabilized its market share, and the business has returned to a growth trajectory.

After recovering growth in scale, Alibaba's immediate priority is to improve profitability, which is also the biggest challenge Alibaba needs to address next.

As a leader in the e-commerce model, Alibaba has enjoyed the demographic growth and consumption upgrade dividends over the past twenty years. It is under these trends that Alibaba has created an unparalleled capital story. However, as the dividends of the times gradually fade, Alibaba is left with an e-commerce market that is becoming increasingly competitive.

Alibaba's true test against the headwinds has begun