Alibaba's primary Hong Kong listing amid economic turbulence & tech competition

Alibaba Group Holding Ltd. shareholders have approved upgrading its Hong Kong listing to primary status on Aug. 28, a move that is likely to attract billions of dollars in investment from mainland China.

Shareholders rubber-stamped a plan to convert the Hong Kong listing, as expected, a plan first mentioned two years ago amid heightened tensions with the US. This will allow Alibaba to join a program that links Shanghai and Shenzhen bourses with Hong Kong's exchange. The stock opened little changed in Hong Kong on Friday.

Alibaba's shares have underperformed compared with key rival Tencent Holdings Ltd., as concerns about the impact of increasing competition and slow consumption in China have weighed on the online retailer. It said last week that revenue grew an anaemic 4 per cent after its Chinese e-commerce business shrank for the first time in at least a year. Profit plunged 27 per cent, dashing hopes for a quick turnaround.

Alibaba shares are just up around 8 per cent in Hong Kong this year, far behind the gains of some 30 per cent each by rivals Tencent and Meituan. Weak retail sales in China hurt Alibaba's core business, while price wars in cloud services have held back a prospective new growth driver.

The estimates for the capital inflow from joining the so-called southbound connect program range from about USD 12 billion in the first six months after inclusion to around USD 19.5 billion.

Alibaba Faces many other long-term challenges beyond capital structures and the Chinese economy.

Chief Executive Officer Eddie Wu is spearheading an overhaul at a conglomerate that has, since the big tech crackdown of 2020, fought to consistently deliver on growth and innovation.

Wu, who took over the reins about a year ago from Daniel Zhang, is working hard at improving its twin businesses in commerce and cloud computing while placing long-term bets on AI technology.