Alibaba Group Holding Limited (NYSE:BABA) prices Hong Kong shares at HK$176

Alibaba Group Holding Limited (NYSE:BABA) prices Hong Kong shares at HK$176

Alibaba Group Holding Limited (NYSE:BABA) prices Hong Kong shares at HK$176

Alibaba Group Holding will offer the investors of its Hong Kong shares at a slight discount to its US-listed depositary shares, as Asia’s most valuable company prepares to kick off the world’s largest initial public offering this year.

The Hangzhou-based company has priced its secondary stock offering in Hong Kong at HK$176 each based on guidance at the end of a global marketing process, it said in a statement.

A rush for its shares among retail investors is said to have boosted the oversubscription rate to 40 times, locking up a record HK$94 billion for an IPO in the city this year, said the people who declined to be named.

Separately, the Hong Kong Exchanges and Clearing Limited (HKEX), the operator of the bourse, said it would roll out options and futures contracts for the stock when Alibaba makes its trading debut on November 26. The shares can also be available for short-selling.

The offer price works out to about 2.6 per cent discount to Alibaba’s November 19 closing price of US$185.25 in New York. It is also about 6.4 per cent below the indicative ceiling of HK$188 each for retail investors in Hong Kong. Eight Hong Kong-listed shares are worth the equivalent of one New York-listed share.

Based on the pricing the company will raise as much as HK$101.2 billion (US$13 billion) if the full allocation of 575 million shares is taken up, making it the biggest offering globally so far this year.

Shares of Alibaba, owner of South China Morning Post, are expected to start trading on November 26, according to its listing prospectus.

China International Capital Corporation (CICC) and Credit Suisse are the sponsors for the secondary offering in Hong Kong. Investors in Hong Kong have borrowed a total of HK$13.3 billion in margin financing to subscribe for the shares, representing an oversubscription of 4.5 times, some stockbrokers estimated. Bright Smart Securities, the most active retail broker in local IPO margin financing, offered HK$3.2 billion, it said.

Still, Alibaba and other companies with so-called weighted voting rights will not be able to join the Hang Seng Index until at least May next year at the earliest, according to index compiler Hang Seng Indexes.

“We will have a consultation in the first quarter on whether to add any weighted voting rights companies or secondary listing companies into the Hang Seng Index,” Vincent Kwan Wing-shing, chief executive of Hang Seng Indexes, said in a phone interview. “We will announce the conclusion in May next year.”

Alibaba will trade under stock code number 9988, in lots of 100 shares. On the same day, the HKEX will roll out Alibaba options at 500 shares per lot, with maturities ranging from one to 10 months. The futures contracts will be offered at durations of one to seven months, it said.

Alibaba’s shares will also be designated for short-selling, which enables traders to bet on their decline to hedge their investments. Short-selling occurs when traders sell a security on anticipation of its price falling, buying it back at a lower price later and pocketing the difference as profit.

Investment banks can also issue derivative warrants on Alibaba’s shares, according to the HKEX.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 176.33.

The projected upper bound is: 192.21.

The projected lower bound is: 172.74.

The projected closing price is: 182.48.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. The two candles preceding the falling window were black, which makes this pattern even more bearish.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 49.6466. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 54.05. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 75 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -46. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -2.900 at 182.350. Volume was 20% above average (neutral) and Bollinger Bands were 17% narrower than normal.

Open     High      Low     Close     Volume___
183.690 183.690 181.060 182.350 3,578,849
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 185.05 176.15 173.90
Volatility: 22 36 36
Volume: 3,568,113 2,997,193 3,236,238

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ALIBABA GRP ADR gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
ALIBABA GRP ADR is currently 4.9% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into BABA.N (mildly bullish). Our trend forecasting oscillators are currently bullish on BABA.N and have had this outlook for the last 16 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

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