Alibaba investors convert US shares for Hong Kong

Bloomberg

Several of Alibaba Group Holding Ltd’s biggest investors have converted billions of dollars in US shares for Hong Kong stock in part to avoid potential US sanctions and de-listings of major Chinese technology companies.
Temasek Group Holdings Pte, Baillie Gifford & Co, and Matthews Asia are among the major shareholders that have swapped stakes in the Chinese e-commerce giant to take advantage of new rules easing the switch following Alibaba’s listing in Hong Kong last year. Geopolitics is contributing to the shift, according to people familiar with the moves.
“Lots of long-term fund managers, especially the ones whose fund managers are based in Asia, are switching or considering switching from ADRs into Hong Kong-listed shares,” said Nelson Yan, head of offshore capital markets investment at Creditease Wealth Management (Hong Kong) Ltd, referring to American Depositary Receipts.
The Alibaba stock shifts are a sign that the Trump administration’s fierce rhetoric against Chinese tech firms is prompting investors to take steps to avoid the potential fallout. At the same time, as Chinese companies seek more dual listings in Hong Kong, the moves threaten to drain liquidity of the New York shares.
Baillie Gifford, whose partner and portfolio manager James Anderson told Bloomberg Television in March that Alibaba could become a $2 trillion company, swapped 10.4 million US-listed shares worth about $2.67 billion in the second quarter. That’s about a fifth of its stake, and is the biggest change since it first bought shares in 2014.
The money manager, among Alibaba’s largest shareholders, converted the stock to the Hong Kong-listed shares, according to a person familiar with the move. A spokesperson for the Edinburgh-based firm declined to comment.
A spokesman for Singapore’s state-owned investor Temasek confirmed that it swapped half of its stake representing 12.1 million shares — worth about $3 billion — from the US to Hong Kong, declining to comment further.
The Hong Kong shares may also get a boost from MSCI’s plan to reduce the Chinese ADR weightings in its indexes, while raising Hong Kong stocks, he said.