Edinburgh asset management giant Baillie Gifford and other major shareholders of Chinese e-commerce behemoth Alibaba Group Holding have swapped billions of dollars in Alibaba’s US shares for Hong Kong-listed stock, according to a Bloomberg News report.
The big Alibaba shareholders are converting American Depositary Receipts (ADRs) in the company to take advantage of new rules making it easier to switch following Alibaba’s listing in Hong Kong last year — and partly to avoid potential US sanctions and delistings of major Chinese companies in America.
The Bloomberg report said Baillie Gifford swapped 10.4 million US-listed shares of Alibaba worth about $2.67 billion in the second quarter — about 20% of its stake.
Baillie Gifford, among Alibaba’s largest shareholders, converted the US-listed stock into Hong Kong-listed shares.
The Edinburgh-based fund management firm declined to comment.
“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,” Nelson Yan, head of offshore capital markets investment at Creditease Wealth Management (Hong Kong), told Bloomberg.
“Demand for these ADRs in the US is now clouded by the politics.”
Kenny Wen, Hong Kong-based strategist at Everbright Sun Hung Kai Co, told Bloomberg: “The majority of its shares are still in the US, but the relocation is already happening and that’s driven by long-term holders.
“In the very long run, we can’t exclude the possibility for Hong Kong to become the primary listing place for Alibaba.”
Baillie Gifford has assets under management and advice of more than £260 billion ($345 billion) and its high-profile funds are major shareholders in prominent global companies including Alibaba, Tesla, Amazon, Tencent and Netflix.
Earlier this month, Edinburgh’s other fund management giant, Aberdeen Standard Investments, wrote to the US Securities and Exchange Commission (SEC) to warn that proposed new legislation to force Chinese companies off American exchanges — unless they agree to audit inspections — could harm minority shareholders.
Aberdeen Standard said the Holding Foreign Companies Accountable Act (HFCAA), if enacted, could lead to more than 200 Chinese companies with a total market capitalisation of $1 trillion delisting from US exchanges.
Aberdeen Standard Investments owns stakes in around a dozen Chinese companies listed in the US, held across various Chinese Equities, Asian Equities, Global Emerging Markets and Global Equities funds.
Aberdeen Standard manages about $650 billion of assets worldwide and is the asset management business of Edinburgh-based Standard Life Aberdeen plc.