Hong Kong’s political unrest is posing a dilemma for Alibaba Group Holding Limited (NYSE:BABA)

Hong Kong’s political unrest is posing a dilemma for Alibaba Group Holding Limited (NYSE:BABA)

Hong Kong’s political unrest is posing a dilemma for Alibaba Group Holding Limited (NYSE:BABA)

Hong Kong’s political unrest is posing a dilemma for Alibaba Group Holding Ltd on the timing of its planned US$15 billion listing in the city, with sources saying China’s biggest e-commerce company is now considering several timetables.

New York-listed Alibaba was most likely to launch the offer – potentially the world’s biggest of the year – as early as the third quarter, sources have said, and late August, after its first-quarter earnings, was widely viewed as the most likely window.

In preparation for the giant offer, bankers advising other large listings in Hong Kong have been careful to avoid planning their launches around that period, fearing that a clash of timing would crowd out their offerings.

But not a word was mentioned by Alibaba on the Hong Kong listing when it released estimate-beating earnings on Thursday nor did the offer come up in the hour-long discussion with analysts after the results.

The Hong Kong listing deal was estimated at up to US$20 billion, but is more likely, according to sources close to the deal, to raise between US$10-US$15 billion.

The listing was always expected to be a complex affair because of China’s tight control of cross-border share trading, but Hong Kong’s unrest has taken the complexity several notches higher.

More than 10 weeks of confrontations between police and pro-democracy protesters have plunged Hong Kong into its worst crisis since it returned to Chinese rule in 1997 and presented President Xi Jinping with his biggest popular challenge since taking power in 2012.

Tear gas has been used frequently by police while more than 700 people have been arrested.

This week protesters effectively closed the city’s airport on two successive days, disrupting tens of thousands of travellers and posing a practical problem to any company considering launching a deal roadshow in Hong Kong.

Under the circumstances, when Alibaba lists becomes crucial as it sends a signal to the rest of the world on the state of Hong Kong as a business and financial centre and provides a window into China’s reading of the situation.

“How do you think Beijing feels about giving Hong Kong a US$15 billion gift like this, right now?” asked one capital markets professional not involved in the Alibaba deal.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 184.69.

The projected lower bound is: 165.43.

The projected closing price is: 175.06.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

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 79.3695. This is not an overbought or oversold reading. The last signal was a buy 7 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 59.28. 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 8 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 116.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 6 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 buy 1 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 7.630 at 174.600. Volume was 27% above average (neutral) and Bollinger Bands were 38% wider than normal.

Open     High      Low     Close     Volume___
170.100 175.040 168.570 174.600 4,868,994
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 161.86 167.76 165.53
Volatility: 50 37 40
Volume: 3,627,740 3,749,942 3,752,170

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 is currently 5.5% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 11 periods.

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