Report: Alibaba Exploring Secondary Listing In China

China-based e-commerce giant Alibaba Group Holding Ltd BABA decided to list its stock on the New York Stock Exchange in 2014 in what proved to be the single largest IPO in U.S. history. Now, the company is working on listing its stock on a Chinese exchange, The Wall Street Journal reports.

What Happened

Alibaba is exploring options for a secondary listing in China, but before doing so the country may need to change its securities laws.

Alibaba is officially incorporated in the Cayman Islands and Chinese laws do not permit foreign companies from listing their shares on one of their exchanges. Chinese laws also prohibits foreign companies from selling their stock directly to its citizens which implies Chinese investors missed out on Alibaba's 86 percent gain over the past year alone.

Why It's Important

China's government is in the process of working towards allowing foreign companies to list their shares on a Chinese exchange. Liu Shiyu, chairman of the Chinese securities regulator, told The Wall Street Journal the government is working a "bit slower than the firms expect and a bit quicker than you expect." It's also a "real pity" that Chinese investors are missing out triple-digit percentage gains because of regulatory roadblocks.

What's Next

China's securities regulatory body is expected to detail plans for a depositary share regime within a few months, WSJ said. But the country may also need to work on improving its reputation of overseeing stock exchanges that are akin to a casino as the "listings of a few hot names could fuel speculation by Chinese individual investors, who dominate trading in the markets."

Alibaba was trading higher by 3.4 percent at $199.20.

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Image credit: Andy Mitchell, Flickr