Glow over Alibaba IPO rubs off on Chinese firms

Seven Chinese firms that are partly owned by Alibaba or have partnerships with the world's largest e-commerce company have seen their stocks soar by up to 24 per cent in the past month.
Seven Chinese firms that are partly owned by Alibaba or have partnerships with the world's largest e-commerce company have seen their stocks soar by up to 24 per cent in the past month.PHOTO: AGENCE FRANCE-PRESSE

This story was first published in The Straits Times on Sept 17, 2014

The shares of several Chinese firms with links to Alibaba have rallied ahead of the e-commerce giant's American listing, but the effect seems to have worn off on Singapore Post.

Seven Chinese firms that are partly owned by Alibaba or have partnerships with the world's largest e-commerce company have seen their stocks soar by up to 24 per cent in the past month.

SingPost, in which Alibaba has a 10.35 per cent stake, has not fared as well.

When the Alibaba deal was announced in May, the postal firm's shares shot up 8.4 per cent in one day to a then record high of $1.68.

It rose gradually to $1.76 on Aug 15 and closed at $1.73 yesterday for a total increase of 10.4 per cent since the Alibaba news.

The Alibaba effect has been far more pronounced in China.

Financial software developer Hundsun Technologies has been a particularly big winner, with its stock up 24 per cent, according to Bloomberg yesterday.

A company controlled by Mr Jack Ma, Alibaba's billionaire founder, owns a 20.62 per cent stake in the Shanghai-listed company.

China Shipping Container Lines, whose parent company works with Alibaba on cross-border logistics, is up 19 per cent.

On average, the seven Alibaba-linked stocks have gained 15 per cent over the past month, beating the benchmark Shanghai Composite Index, which is up 5 per cent.

Remisier Desmond Leong yesterday said there was the same degree of anticipation when Alibaba invested in SingPost but the excitement has died down.

He noted: "SingPost historically doesn't have that sort of push as China stocks or penny stocks, and the Singapore market recently has been quiet."

The gains of the China-listed firms reflect growing confidence that Alibaba's initial public offering (IPO) "will brighten prospects for business partners", according to Bloomberg.

The strong interest has prompted Alibaba to increase the top end of a marketed range for the sale to above US$70, from US$60 to US$66 previously.

Mr Ma was in town yesterday, along with Alibaba executive vice-chairman Joe Tsai and chief executive Jonathan Lu, for a roadshow promoting the IPO, Xinhua reported, citing an investor who was present at the event.

Investors said Mr Ma addressed Alibaba's growth strategy and its potential in the Chinese market, highlighting third- and fourth-tier cities as the company continues to grow.

The chances of SingPost's share price getting another boost from the IPO glow seem remote.

Remisier Alvin Yong said the local market lacks a catalyst to take the shares to the next level.

He said: "Fund managers are not even playing the market at the moment... and there's no good news or impetus to push the market, everyone is adopting a wait-and-see approach."

Mr Yong also noted that SingPost and its investors had their bull run far earlier than the other companies.

"SingPost has already enjoyed the Alibaba effect, you can't expect the same effect twice."

rachaelb@sph.com.sg