Alibabas Ipo Dilemma Hong Kong or New York_valuation
Alibabas IPO Dilemma Hong Kong or New York
3. The pros and cons of listing in Hong Kong versus New York
a) Advantage and disadvantage listing in Hong Kong:
• The dual-class structure is not allowed in Hong Kong
• Most investors know that Alibaba has used its services before.
• Most investors in Hong Kong Stock Exchange have similar cultural and linguistic status as in China
• Compliance costs lower than in the United States
• Large IPO investment banking fee is lower than in U.S. It costs between 2.5-3.5%, 50% less than the U.S. fee (7%).
• Prices of US-traded firms were sensitive to movement in the US market even though the net asset values were entirely determined by the asset values that were outside the US. Listing in HKEx would shield prices of companies like Alibaba from movement in the US market.
• Less likely to be involved in class actions suits, which is more common in the United States.
• Investors have less legal protection than the United States
• pre-marketing is allowed in HK
b) Advantage and disadvantage listing in U.S.:
• Chinese accounting practices reduce the confidence of U.S. investors after Chinese scandals with China Media Express, China Forest and other fraudulent Chinese companies.
• Compared with Hong Kong investors, investors in New York value the Internet companies with higher multiples
• HK exchange unmatched size and depth of the U.S. exchange.
• Higher visibility in US stock market
c) If we were Jack Ma, we would list on the US stock exchange, and the reasons are as follows: