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Alibaba drives home costs of HK unrest
HONG Kong could lose Alibaba - again. The Chinese giant will postpone its mooted US$15 billion listing there due to financial and political instability, Reuters reported on Wednesday. This will deter others in the queue, landing a fresh blow to a city where business confidence is shrinking.
The decision by Jack Ma's e-commerce titan to delay its secondary listing comes at a vulnerable time. The city is already lagging New York for big listings this year. Last month, brewer Anheuser-Busch InBev ditched plans for a near-US$10 billion IPO of its Asian unit.
The benchmark Hang Seng Index was down nearly 10 per cent over the past month, weighed down by more than 11 weeks of clashes between police and protesters.
One fear is that Mr Ma will cancel the deal altogether. The company never officially confirmed its listing plans. With a cash trove of over US$30 billion as of June, it's not clear why Alibaba needs to raise fresh capital anyway.
There are political considerations too. A source said gifting Hong Kong with a lucrative deal of this size at this time would "certainly annoy Beijing".
This is plausible; Beijing's influence seems to have had a hand in last week's senior-level resignations at Cathay Pacific.
Either way, a delay will sound the alarm for others. At least five companies are readying to raise a combined US$4.5 billion, Refinitiv's IFR reports. If Alibaba shelves its quasi-homecoming, it will be embarrassing, not least because Hong Kong eased its listing requirements Alibaba picked New York for its 2014 IPO.
The cautious stance comes as protests have emptied out shopping areas and scared off tourists, disrupting business. Revised government data last week showed the economy shrank 0.4 per cent in the three months to June, putting the city on the brink of its first recession in a decade.
Alibaba's message is that the slowdown could worsen. REUTERS