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Asian markets set to rebound, Alibaba prepares HK IPO

Asian markets set to rebound, Alibaba prepares HK IPO

Asian equities are poised to open mildly higher, recovering a bit from yesterday’s heavy selloff as the US market showed resilience overnight.

Against the backdrop of rising trade uncertainty and escalating violence in the city of Hong Kong (HK), the Hang Seng Index suffered heavy profit-taking selloff over the past two days. Panic spread over to the other markets including Shanghai and Singapore.

Early this morning, the offshore yuan strengthened over 100 pips against the dollar, suggesting that confidence is partially restored and it will support a mild rebound in HK equities at open. USD/CNH has fallen back to 7.001 area from 7.012 seen last night, and 7.00 has now become an immediate support level.

Alibaba’s ‘11.11’ Singles’ Day this year registered total sales of $2,684 billion yuan, up 26% from a year ago. A fresh record suggests strong consumer spending power in mainland China, with smartphones, apparels and air-conditioners among the top selling items in Alibaba’s TMALL.

Alibaba is preparing for a dual-listing IPO by the end of November in the Hong Kong stock exchange (HKEX), in which the company aims to raise some US$ 15 billion. This is expected to be the largest IPO in the HK market in 9 years. The IPO price will be set at a 5% discount below Alibaba’s ADR price in the US and major shareholders will have a tendency to float the ADR price in order to sell a higher price in HK.

This deal is likely to attract high public interest and it will bring China’s largest e-commerce company closer to Asian investors. The risks are from HK’s violent clashes between police and protesters which is creating instability.

In Singapore, the Straits Times index rebounded 0.4% today, lifted by banks, real estate and consumer sectors. However, with the lack of positive catalysts, the sustainability of this rebound is questionable.

Alibaba 11.11 total sales


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