Alibaba's Hong Kong shares rise 6.6% from issue price on heavy trading

AlibabaGroup's Hong Kong shares closed their first trading session up 6.6% from the issue price after this year's largest stock sale.
Shares worth HK$13.99 billion (1.39 billion pounds) were traded, according to Refinitiv data, making it the third biggest debut on record for the Hong Kong market.

Alibaba is already the fifth most-traded company in New York this year, averaging $2.6 billion a day, Refinitiv data showed.
The Chinese e-commerce giant has raised at least $11.3 billion from its secondary listing, which has been seen as a vote of confidence in Hong Kong's financial future amid six months of increasingly violent anti-government protests.
The figure could climb to as much as $12.9 billion if Alibaba chooses to exercise an over-allotment option within 30 days of the start of trade..
Alibaba shares closed at HK$187.60 which was 6.6% higher than the issue price of HK$176 per share.
On Monday its U.S. American Depository Shares (ADS) closed at $190.45. With eight Hong Kong shares per ADS, that implied a price of HK$186.30 per share.
Alibaba's debut ranks third in the city for first-day turnover behind insurer AIA Group in 2010 which recorded $HK49.38 billion in turnover, China Literature was second with $HK14.17 billion when it debuted in November 2017, Refinitiv data showed.
The average daily turnover on the Hong Kong Exchange this year has been $11.6 billion, according to the exchange's third-quarter earnings report, implying that Alibaba on Tuesday accounted for more than one-tenth of total market turnover.
The funds raised from the Hong Kong listing will help Alibaba, Asia's biggest company by market value and world's seventh largest, invest more in a range of online services.
But analysts also note that the establishment of a base of investors in Hong Kong and China could function as a backup for the company should its shares be hit in New York amid the U.S.-China trade dispute.
The Hong Kong and New York stocks are fungible, which means investors can buy and sell the same shares on either exchange and that pricing on the exchanges are unlikely to diverge too far from each other.
A LONG TIME COMING
The premium to New York reflects the willingness of investors in the city and Asia to take on the stock of a company they know well, market participants said. Expectations are also high that it will get a lift in valuation when it becomes eligible for trading in the Stock Connect that links Shanghai and Shenzhen with Hong Kong next June.
"There will be some upside for the company's price in Hong Kong but I don't think we will see the shares double or triple in a year," said Geo Securities Chief Executive Francis Lun.
At Tuesday's listing ceremony, CEO Daniel Zhang noted the Hong Kong debut had been a long time coming.
Alibaba had hoped to initially list in Hong Kong, but eventually chose New York for its record-breaking $25 billion initial public offering in 2014 after its unusual governance structure failed to win acceptance from Hong Kong regulators.
The loss of the listing triggered years of argument and consultations that resulted in rule changes last year.
"Thank you Hong Kong and thank you HKEX. Your reform and innovation of the capital markets in the past few years has made it possible for us to realise what we missed five years ago," Zhang said at the listing ceremony.
The Hong Kong listing has surpassed other large stock sales this year, ranking ahead of Uber Technologies $8.1 billion IPO and $5.7 billion IPO for Anheuser-Busch InBev's Asian brewing business in Hong Kong.
In its prospectus, Alibaba said it would use the funds raised to increase its investment in online delivery and local services platform Ele.me and in online travel group Fliggy.
Alibaba also plans to spend more on developing Youku, one of the leading online video platforms in China.
Small retail investors were enthusiastic buyers of the deal, subscribing for 40 times the shares they were originally allotted and eventually taking 10% of the deal.

'Gold standard' for succession: Jack Ma is retiring as Alibaba thrives

Jack Ma steps down next week as chairman of Alibaba, but the start-up he built into and online retail behemoth is expected to keep thriving into a new era thanks to a culture of innovation he helped nurture.
A former English teacher whose often playful image shattered the stereotype of the drab Chinese executive, Ma officially leaves on Tuesday, his 55th birthday.

Ma plans to put his vast fortune - among China's biggest at $41 billion - into initiatives serving his first love, education, following the footsteps of a fellow tech innovator he admires: Bill Gates.
The departure of charismatic founders from big tech companies typically causes hand-wringing and wobbling share prices, but not at Alibaba.
The company's operational reins have for a couple of years now been in the hands of a respected team of executives who have kept it on e-commerce's cutting-edge.
Ma was Alibaba's driving force and a frequently irreverent ambassador for the company, known for stunts like a Michael Jackson-inspired dance at an Alibaba anniversary celebration two years ago and starring in his own kung fu short film.
He is expected to retain some advisory functions.
But the transition to figures like CEO Daniel Zhang, and co-founder and executive vice chairman Joseph Tsai -- announced exactly a year ago -- may prove to be the "gold standard" for tech-company succession, said Jeffrey Towson, an equity investor and professor at Peking University.
ALSO READ: People may have to work just 12 hours a week thanks to AI, says Jack Ma
"He's succeeded at what Steve Jobs, Bill Gates and (Yahoo co-founder) Jerry Yang failed at, which is making themselves redundant," said Towson, who has authored books on China's leading companies.
"He built a really robust culture at Alibaba and they are still just innovating like crazy." Ma was a cash-strapped Chinese entrepreneur when he convinced friends to give him $60,000 to start Alibaba in the eastern city of Hangzhou in 1999.
With monthly active users of more than 750 million today, Alibaba helped to unlock China's massive consumer power, coincidentally a key objective of the government today as its seeks to fuel domestic demand to lessen the reliance on fickle foreign trade.
Its Taobao and Tmall platforms have helped countless businesses grow.
"(Ma) has been the driving force for the development of China's internet industry and economy. He is (China's) entrepreneurial godfather," said furniture maker Cheng Huaibao.
Cheng, 30, is one of millions of small businessmen, often located in so-called "Taobao villages" -- communities whose economies are oriented towards Alibaba's vast market -- who leapt into commerce thanks to the company.
Cheng started making bunk beds in 2010 in eastern Jiangsu province with 10 staff. Today his thriving operation has 100 employees.
"Without Teacher Ma, I wouldn't have come out and started my own business," Cheng said, using a common Chinese term of respect.
ALSO READ: Jack Ma takes on Elon Musk over future of Artificial Intelligence
Alibaba and its imitators are accused of fostering rampant commercialism and materialism and the selling of counterfeit goods.
Chinese e-commerce today also produces mountains of packaging material, contributing to a rising national garbage problem.
And some of Ma's comments have drawn barbs, including recently dismissing concerns that Chinese workers were toiling excessive hours, as did the news last year that he was a Chinese Communist Party member.
But Alibaba has continued to expand its ecosystem, pushing into cloud computing, entertainment, and a "new retail" concept -- combining online ordering with bricks-and-mortar stores -- while its Alipay finance unit has pioneered cashless digital payments.
Despite slowing Chinese economic growth and the US trade war, earnings have so far remained strong.
ALSO READ: How Jack Ma's $290 billion loan machine is changing Chinese banking
Ma, who has established an eponymous charitable organisation, already has launched a range of education initiatives.
Last month he sketched out his mantra going forward during a technology debate in Shanghai with Elon Musk, good-naturedly chiding the US entrepreneur about his obsession with putting a man on Mars.
"We need a hero like you, but we need more heroes like us improving things on Earth," Ma said.

BigBasket to invest $100 mn to set up vending machines, distribution points

Alibaba-backed company BigBasket is pumping in $100 million (about Rs 698 crore) to strengthen its supply chain by setting up vending machines and smaller distribution centres across various cities it operates in.
The online grocery platform -- which is registered as Supermarket Grocery Supplies -- had recently raised $150 million in funding, led by Mirae Asset-Naver Asia Growth Fund, CDC Group and Alibaba Group.

Founded in 2011, BigBasket operates in 25 Indian cities. It plans to utilise the proceeds of this fundraising - which has placed the Bengaluru-based company in the unicorn club (companies with valuation of $1 billion and above) - to further penetrate into existing markets with more investments in the first mile, scaling-up of its supply chain and for developing new reseller channels.
"We want to enable two-hour delivery in top 10 cities that we operate in by July this year. For that, we have been investing in strengthening our distribution centres. We have 18 large and 80 smaller distribution centres together with our resellers and this will be ramped to 20 large and 100 smaller ones by June this year," BigBasket co-founder Vipul Parekh told PTI.
This move will help BigBasket reduce delivery time and ensure quality of dairy and fresh produce, he added.
The company expects its capital expenditure towards these initiatives to be about $100 million this year.
"We are ramping up our milk subscription business - BB Daily - under which we have built the supply chain to deliver milk and other items in the morning. The service was started around September last year and our sellers already carry out 90,000-100,000 orders a day. We are aiming to take this to a million orders a day and a stronger supply chain infrastructure will play a key role in this," he said.
Another area where the company is investing is in towards setting up unmanned vending machines - BB Instant - in office and apartment complexes.
"We see a huge potential of these machines. Customers can use their app to access the machine and buy products. The only human intervention is in re-stocking. We have already placed such machines at 200 sites in Bengaluru and over the next one year, we want to have 2,000 such sites across the 10 large cities where we operate," Parekh said.
Also, given that these machines are placed within apartment and office complexes, the risk of vandalism is lower.
Parekh said with these investments, BigBasket - which competes with SoftBank-backed Grofers as well as Amazon.in and Walmart-owned Flipkart - will continue to build further on its leadership in the grocery business.
"We have been re-engineering our supply chain to allow for faster delivery to our resellers and to reduce the time from farm to our customers. This coupled with an expansion in our range of private label products will create a solid foundation for growth in both revenue and profitability," Parekh said.

Jack Ma plans to step down from Alibaba on Monday, pursue charity, NYT says

Alibaba Group Holding Ltd. Chairman Jack Ma told the New York Times that he plans to step down from his role at the company on Monday, marking the end of an era at China’s e-commerce juggernaut.
China’s richest man said that he would remain on Alibaba’s board of directors as he pursues philanthropic endeavours, the New York Times reported. Ma told Bloomberg earlier this week that he wanted to dedicate more of his time and fortune to philanthropy with the creation of a foundation in his own name focused on education, following in the footsteps of fellow billionaire Bill Gates.

Even after stepping down as chief executive officer in 2013, the former English teacher remains the public face of a company with a market value of more than $400 billion and interests spanning e-commerce and Hollywood film production to cloud computing and online payments. During his time as chairman, he helped guide growth at home and overseas while spearheading its 2014 initial public offering, the biggest ever.
ALSO READ: Here's what billionaire Jack Ma will do after retiring from Alibaba
Ma, who turns 54 on Monday, has a net worth of more than $40 billion, according to the Bloomberg Billionaires Index. While Ma sees himself as an accidental executive who only entered the business world with Alibaba’s founding almost 20 years ago, he has become one of China’s most recognized corporate leaders.

Alibaba's AI outguns humans in Stanford University reading test

Alibaba has developed an artificial intelligence model that scored better than humans in a Stanford University reading and comprehension test.
Alibaba Group Holding Ltd. put its deep neural network model through its paces last week, asking the AI to provide exact answers to more than 100,000 questions comprising a quiz that’s considered one of the world’s most authoritative machine-reading gauges. The model developed by Alibaba’s Institute of Data Science of Technologies scored 82.44, edging past the 82.304 that rival humans achieved.
Alibaba said it’s the first time a machine has out-done a real person in such a contest.
Microsoft achieved a similar feat, scoring 82.650 on the same test, but those results were finalized a day after Alibaba’s, the company said.
The Chinese e-commerce titan has joined the likes of Tencent Holdings Ltd. and Baidu Inc. in a race to develop AI that can enrich social media feeds, target ads and services or even aid in autonomous driving. Beijing has endorsed the technology in a national-level plan that calls for the country to become the industry leader 2030.
So-called natural language processing mimics human comprehension of words and sentences. Based on more than 500 Wikipedia articles, Stanford’s set of questions are designed to tease out whether machine-learning models can process large amounts of information before supplying precise answers to queries.
“That means objective questions such as ‘what causes rain’ can now be answered with high accuracy by machines,” Luo Si, chief scientist for natural language processing at the Alibaba institute, said in a statement. “The technology underneath can be gradually applied to numerous applications such as customer service, museum tutorials and online responses to medical inquiries from patients, decreasing the need for human input in an unprecedented way.”