Alibaba postpones Hong Kong listing as protests roil markets

Adding to signs of a traffic slowdown, Qantas, the Australian airline, said Thursday it would cut flight capacity to Hong Kong.

China’s state-controlled news media has also pressured global accounting firms like PwC and Deloitte to keep their employees from participating in protests. Alibaba’s decision to postpone its offering did not stem from pressure from Chinese authorities, according to one of the people briefed on the company’s plans.

A semiautonomous region of China, Hong Kong has long offered access to surging Chinese economic growth while granting the protections of a fiercely independent judiciary, wide freedom of expression, one of the world’s lowest urban crime rates and stable political leadership.

Those factors have helped make Hong Kong one of the world’s favorite places to invest and raise money. Last year, Hong Kong-listed companies raised $69 billion from investors, according to the local exchange operator. In addition, it took steps last year to loosen rules for listing there. A decision by the city’s regulator to allow so-called dual class shares — which gives the founders of a tech company more power than ordinary shareholders — was seen as a broadly positive development for Beijing, which has been vocal about keeping its tech boom closer to home.

Depending on the details, an Alibaba listing would further bolster that total. Five years ago, the Chinese e-commerce company became the world’s largest initial public offering, after raising $25 billion on the New York Stock Exchange. Last week, it reported strong, though slowing, results, demonstrating that it continues to prosper from urbanization and the rise of online retail in China despite the slowing economy there.

The Hong Kong stock offering, which would supplement its existing American listing, would have been one of the biggest in Asia in recent years. It was widely expected to raise billions of dollars in fresh capital for the technology giant.

But the demonstrations that have rocked Hong Kong since June have cast an unexpected pall over the potential offering by roiling the kind of stability that deal-makers crave.

The unrest could last well past October. The Hong Kong government has shown little sign that it will acquiesce to the demands of demonstrators, who want universal suffrage in a political system now dominated by Beijing, the full abandonment of a bill that would allow criminal suspects to be extradited to the mainland and an investigation into the tactics of the police in trying to quell the protests.

Hong Kong has also been hit by the trade war between the United States and China. Thanks to its relatively open borders with the rest of the world, Hong Kong serves as an essential trade conduit for many of China’s factories. Now, a growing number of economists are predicting the territory’s economy will shrink in the coming months.

For all of Hong Kong’s problems, Alibaba has a number of reasons for sticking with its plan to list its shares there. A Hong Kong listing could play well with China’s leaders, who want to build the country’s stock markets so that the markets shed a reputation for corruption and insider trading and become a reliable way for companies to raise money.

In the longer term, the Trump administration could take a tougher stance toward Chinese companies raising money in the United States, which could make Alibaba’s New York listing politically complicated.